The White House report, The Great Transshipment Scam, frames illegal transshipment as a major tariff-evasion risk, estimates annual flows of $40 billion to $303 billion, and announces expanded use of analytics and AI-enabled tools to identify false origin claims. Combined with Executive Order 14411's tightened importer accountability requirements, importers that rely on supplier statements without substantiating where substantial transformation occurred face increased exposure to duties, penalties, detentions, EAPA actions, and possible criminal enforcement referrals.

What Is Transshipment?

Transshipment generally refers to routing goods through an intermediary country to conceal their true country of origin and obtain more favorable tariff treatment. Legitimate supply chains may involve multiple countries, but compliance concerns arise when goods are merely relabeled, repackaged, re-invoiced, subject to minor processing, or documented as if they originated in a lower-tariff country when the applicable origin standard does not support that result.

For importers, the practical point is straightforward: origin is not determined by the shipping route, last port of export, warehouse location, or commercial label. It must be supported under the applicable customs-origin rules, including substantial transformation where relevant.

Why This Matters Now

The White House Office of Trade and Manufacturing Policy report, The Great Transshipment Scam (August 2026), identifies more than 40 countries associated with elevated illegal transshipment risk and states that differentiated tariff treatment has increased the importance of effective transshipment enforcement. Tariff differentials, Section 301 duties, AD/CVD orders, forced labor restrictions, and other trade measures create strong incentives for origin evasion.

The report reviews five government and private-sector estimates of annual illegal transshipment flows, ranging from approximately $40 billion (Goldman Sachs) to $303 billion (Altana), with the White House Council of Economic Advisers using a $60 billion midpoint. A narrower Commerce transaction-level analysis identified approximately $67 billion in 2025 transshipment through Mexico, India, and Vietnam alone, implying roughly $28 billion in lost tariff revenue.

The report groups the identified jurisdictions into three tiers: large diversified trading partners where transshipment risk is embedded within broad legitimate trade flows (including Canada, Mexico, the European Union, India, Japan, South Korea, and Taiwan); economies deeply integrated with China-linked supply chains (Vietnam, Thailand, Malaysia, Indonesia, Brazil, and Türkiye); and smaller jurisdictions offering free-zone, port, or preferential-access advantages (including the United Arab Emirates, Panama, Cambodia, and Jordan). Importers sourcing through any listed jurisdiction should anticipate heightened origin scrutiny.

Importers should expect origin claims to receive greater scrutiny where sourcing patterns changed after new tariff measures, where goods from higher-duty countries are routed through intermediary jurisdictions, or where the claimed country of origin has limited evidence of meaningful production. These fact patterns may trigger requests for information, cargo holds, audit inquiries, EAPA allegations, or penalty investigations.

New Detection Tools and Enforcement Capabilities

CBP and other agencies increasingly have access to sophisticated data tools that make transshipment easier to identify. The report describes an AI-enabled enforcement platform ”the "Detective Border” integrating import data analytics, supply-chain mapping, routing histories, ownership and affiliation analyses, trade-flow anomalies, production-capacity comparisons, and computer vision to identify high-risk shipments and potential false origin claims.

CBP enforcement activity has already accelerated. The report states that shipments identified with post-release discrepancies increased 245 percent in the 526-day period following the January 2025 inauguration compared with the prior period, while associated revenue assessments rose from $9.6 billion to $25.8 billion.

Separately, Executive Order 14411 (June 3, 2026) directs the Department of Homeland Security and CBP to tighten importer-of-record requirements, increase bonding and domestic-asset requirements, require additional ownership and business-affiliation disclosures, impose good-standing requirements, and strengthen penalties. Importers should expect these measures to raise documentary and financial obligations at entry, particularly for entities with foreign ownership or limited U.S. presence.

These tools allow enforcement authorities to compare declared origin against shipment routes, supplier relationships, product classifications, trade patterns, and the manufacturing capacity of the claimed country of origin. As a result, importers should assume that unsupported origin positions may be identified even when entry documents appear facially complete.

Penalties and Enforcement Exposure

Incorrect origin declarations can create substantial financial and operational exposure. CBP may assess unpaid duties and interest, including tariffs that would have applied if the correct origin had been declared. In addition, false statements or material omissions in entry documentation may support penalties under 19 U.S.C. §1592, with exposure increasing significantly where CBP alleges negligence, gross negligence, or fraud.

Where transshipment is used to evade AD/CVD orders, importers may also face Enforce and Protect Act (EAPA) investigations, interim measures, suspension of liquidation, cash-deposit requirements, and final evasion determinations. Depending on the facts, CBP may detain, exclude, or seize merchandise, and serious matters may be referred to Homeland Security Investigations or the Department of Justice.

What Importers Should Do Now

Importers should proactively review country-of-origin determinations for products sourced through third countries, especially where goods are linked to China or other higher-tariff jurisdictions, subject to AD/CVD orders, or affected by forced labor restrictions or other trade measures. The review should focus on whether the declared origin is supported by the applicable legal standard and by objective production evidence.

Companies should maintain manufacturing records, bills of materials, production flow descriptions, supplier certifications, purchase orders, invoices, routing documents, and written legal analyses supporting substantial transformation determinations. Reliance solely on supplier certifications may be insufficient where the underlying production facts do not support the declared origin. Importers should also evaluate whether a prior disclosure, ruling request, revised origin analysis, or enhanced supplier due diligence is appropriate for higher-risk supply chains.

Key Takeaways

• The report's five independent estimates place annual illegal transshipment flows between $40 billion and $303 billion, with tariff revenue losses in the tens of billions of dollars annually, the revenue recovery potential is more than sufficient to ensure sustained enforcement attention.
• Executive Order 14411's importer-of-record, bonding, and ownership-disclosure requirements will raise compliance obligations at entry independent of any specific origin inquiry, and importers should validate origin claims now and maintain documentation that can withstand CBP scrutiny.