Navigating the Great Transshipment Scam: What Importers Need to Know
On August 13th, 2026, the White House Office of Trade and Manufacturing Policy released a comprehensive report titled “The Great Transshipment Scam: Rise, Scope, and Costs”. For importers navigating complex international supply chains, this document serves as a clear warning: U.S. Customs and Border Protection (CBP) is sharply escalating enforcement around tariff evasion, country-of-origin claims, and duty arbitrage.
The report focuses on how foreign manufacturers, primarily from China, route goods through third-party countries to bypass Section 301 tariffs and other U.S. duty frameworks. It identifies over 40 high-risk transshipment jurisdictions, including close trading partners like Mexico, Canada, the EU, India, and various hub nations across Southeast Asia. CBP is specifically targeting activities such as minor processing and assembly intended to mask Chinese content, free trade zone abuse, as well as fraudulent re-invoicing, relabeling, repackaging, and falsifying country-of-origin records.
Under Executive Order 14411 and new enforcement protocols, CBP is deploying advanced compliance mechanisms, most notably the “Detective Border” initiative. This AI-driven system analyzes transaction data, corporate ownership structures, product classification shifts, and regional production capacities in real time. Importers can expect automated flags on irregular routing, sudden volume surges from third-country suppliers, and discrepancies in bills of materials.
To mitigate risk under this heightened enforcement environment, importers should immediately review their supply chain governance. Conduct origin audits to re-verify substantial transformation assessments for products assembled or finished in third countries. Audit free trade claims to ensure preferential tariff claims (such as USMCA) are fully backed by compliant manufacturing records and verified rules-of-origin calculations. Enhance supplier documentation to maintain detailed supplier records, including raw material sourcing, factory capacity metrics, and complete bills of materials.
As federal agencies increase revenue recovery efforts and issue steeper penalties under Enforce and Protect Act (EAPA) investigations, proactive supply chain compliance is essential to avoiding severe operational and financial disruptions. Contact us today to learn more about how best to protect your company as trade restrictions and regulations evolve.