Kathmandu— The White House has accused more than 40 countries, including key allies like Canada, Mexico, Japan, South Korea, India, Israel, Taiwan, and members of the European Union, of enabling China to circumvent U.S. tariffs on goods. A new report released Thursday details a practice where Chinese-made products are routed through third countries for minimal processing before being shipped to the United States with a false country of origin label. The administration estimates this “transshipment scam” costs the US Treasury between $19 billion and $26 billion annually, potentially displacing 450,000 American jobs.

Report Details Alleged Scheme

The 25-page report, titled ‘The Great Transshipment Scam,’ alleges that goods originating in China are being sent to other nations where they undergo superficial changes – such as light processing, repackaging, or relabeling – before entering the U.S. market with a new declared origin. This practice reportedly began after President Trump initially imposed tariffs on Chinese products in 2018 and has expanded as tariff rates have diverged between trading partners.

Economic Impact Assessment

According to the White House, the alleged scheme results in significant financial losses for the U.S. Treasury. The report estimates annual revenue loss of $19 billion to $26 billion due to unpaid tariffs. Beyond direct financial impact, the administration claims that approximately 450,000 American jobs are at risk as a result of this practice. The White House acknowledged that existing tariff discrepancies may have created incentives for these rerouting practices.

Enforcement Plans and Potential Penalties

To address the issue, Washington plans to enhance customs enforcement through an AI-powered system called ‘Detective Border.’ This system is designed to identify suspicious shipping patterns, origin claims, and ownership connections. The report warns that countries found to be facilitating tariff evasion could face additional tariffs, sanctions, or exclusion from the U.S. market.

China’s Response

China has consistently criticized the Trump administration’s tariff policies, labeling them as protectionist measures and economic coercion. Chinese officials argue that these trade restrictions disrupt global commerce. Earlier this month, China’s Commerce Ministry announced tighter export controls on drones and related technologies, along with retaliatory measures against several American entities, signaling a potential escalation of trade tensions.

The White House has indicated it will aggressively pursue enforcement actions against countries involved in the alleged scheme, potentially leading to further trade disputes. The administration expects ‘Detective Border’ to be fully operational soon.

(With inputs from RT)

Originally published on abcnews.com.np.