US Targets Transshipment to Curb Tariff Evasion, Raising Compliance Risks for Agri-Food Trade

The White House has released a new report alleging that the United States is losing an estimated $19–26 billion in annual tariff revenue as imports are routed through third countries to evade duties on Chinese goods. The findings point to widespread use of minimal processing and relabelling in roughly 40 higher-risk partner countries and signal a coming phase of more aggressive enforcement, with potentially significant implications for agricultural and food supply chains.

U.S. officials say the scale of suspected transshipment—valued between $34 billion and $303 billion in goods annually—undermines recent tariff policy and distorts trade patterns, as Chinese-origin products enter via hubs such as Mexico, Vietnam and other manufacturing centres. With U.S. imports from China already at post‑2009 lows and imports from alternative producers surging, the new enforcement push could reshape routing decisions, raise compliance costs and increase shipment delays for agri‑food exporters serving the U.S. market.

Introduction

According to the new White House report, the U.S. is forgoing $19–26 billion in tariff revenue each year because goods that should be subject to China‑focused duties are instead shipped through intermediary countries and declared as originating there. The report designates around 40 jurisdictions as at elevated risk of being used for such schemes, often involving simple repackaging or minor processing that does not substantively change the product.

The findings land against a backdrop of sharply reduced direct imports from China and rising imports from countries such as Mexico, Vietnam and Taiwan, which have captured larger shares of the U.S. market since the latest tariff rounds. Official data show U.S. goods imports from China fell to about $308 billion in 2025, their lowest level since 2009, while imports from Vietnam and Mexico have grown rapidly in the same period. 

Immediate Market Impact

The report sets the stage for tighter enforcement by U.S. Customs and Border Protection (CBP), including greater use of artificial‑intelligence tools to detect suspicious routing and origin misdeclaration. For commodity markets, this points to increased compliance scrutiny on complex, multi‑country supply chains, especially where Chinese inputs are common in processed foods, packaging, fertilizers, agro‑chemicals and agri‑machinery.

In the near term, heightened inspections and origin verification could slow cargo clearance at major U.S. gateways, increase documentation demands and raise the risk of shipment holds or penalties. This is especially relevant for time‑sensitive agricultural commodities, refrigerated or frozen foods and feed ingredients, where delays translate quickly into higher demurrage costs and quality risks.

Price impacts are likely to be uneven. Where U.S. authorities reclassify certain product flows as Chinese‑origin and apply higher tariffs, landed costs could jump, tightening margins and encouraging substitution toward U.S. or other third‑country suppliers. Conversely, clean and well‑documented supply chains may gain a premium as buyers seek to reduce regulatory and reputational risk.

Supply Chain Disruptions

CBP’s deployment of AI‑driven risk‑profiling—combining container markings, packaging characteristics, trade documents and X‑ray imagery—implies a more granular screening of routes involving identified high‑risk hubs. Exporters using trans‑Pacific and intra‑Asian consolidation points before shipping to North America can expect closer scrutiny of bills of materials and certificates of origin.

Ports in North America that handle high volumes of containerized manufactured and processed goods—including agri‑food items—could experience episodic congestion as more consignments are flagged for inspection. Longer dwell times may especially affect mixed‑cargo containers combining food, ingredients and non‑food consumer goods, as any origin concerns with one line item can delay the entire box.

Producers and traders relying on Chinese intermediate inputs but finishing goods in Mexico, Southeast Asia or other jurisdictions will likely face stricter tests on whether sufficient transformation has occurred to confer new origin status. This could prompt some suppliers to re‑engineer product recipes, increase local value‑added or, in some cases, onshore more stages of production closer to end markets to reduce the risk of reclassification as Chinese‑origin.

Commodities Potentially Affected

• Processed foods and consumer packaged goods – Often rely on Chinese‑sourced ingredients, additives, packaging materials or equipment; goods finished in third countries could face origin challenges and higher tariffs if deemed insufficiently transformed.
• Edible oils and oilseed products – Complex refining and blending chains across Asia leave scope for Chinese inputs to be routed via hubs such as Vietnam or Malaysia before reaching the U.S. market. 
• Animal feed, vitamins and amino acids – China remains a major producer of feed‑grade additives and premixes; re‑exports through third countries could attract enhanced verification and potential reclassification.
• Fertilizers and agro‑chemicals – Chinese‑made intermediates used in formulations produced elsewhere may require more detailed origin documentation and supply‑chain tracing.
• Agri‑machinery and food‑processing equipment – Equipment assembled in third countries with significant Chinese components may face tariff uplifts if CBP determines the origin remains Chinese.
• Packaging materials (plastics, paperboard, metal cans) – China is a key supplier of packaging inputs; if routing via Mexico or Southeast Asia is deemed primarily tariff‑driven, landed costs could rise due to reimposed China‑level duties. 

Regional Trade Implications

The crackdown comes after several years in which the U.S. trade gap with China narrowed while deficits with Vietnam, Mexico and Taiwan surged, reinforcing concerns that tariffs have mainly shifted trade patterns rather than reduced imbalances.  Countries most exposed include major manufacturing and processing hubs whose exports to the U.S. have grown rapidly since the China‑focused tariff rounds.

Mexico and Vietnam, in particular, could face more frequent origin audits across a broad product spectrum. While both have attracted genuine nearshoring and investment, the White House report suggests U.S. authorities believe a significant portion of their export growth reflects diverted Chinese goods. Some regional competitors with more localized supply chains could benefit if buyers reorient toward jurisdictions perceived as lower‑risk from an origin‑verification perspective.

For China, tighter enforcement may further depress direct shipments to the U.S. but also constrain the ability of Chinese firms to serve the U.S. market indirectly via partner countries, especially in sectors already targeted by high tariffs. This may accelerate China’s efforts to deepen trade ties with alternative markets and strengthen regional value chains that are less dependent on final U.S. demand. 

Market Outlook

In the short term, traders should prepare for greater documentation requirements, more granular product‑origin checks and a higher probability of inspection delays on U.S.‑bound shipments involving Chinese inputs or high‑risk routes. Logistics providers may respond by adjusting routings, consolidating flows through ports with stronger compliance capabilities and prioritizing customers with robust traceability systems.

Price volatility could increase for certain processed foods, feed ingredients and input‑intensive agri‑products where U.S. enforcement actions reclassify flows and effectively impose retroactive tariff hikes. Market participants will monitor how quickly CBP scales up its AI‑based tools, the frequency of cargo holds and any high‑profile enforcement cases or penalties that signal the administration’s willingness to test the boundaries of origin rules.

Over a longer horizon, exporters with transparent, diversified sourcing and clear documentation of local value‑added are likely to gain share in the U.S. market. Conversely, suppliers whose business models depend heavily on routing Chinese goods through tariff‑favoured jurisdictions may need to restructure supply chains or accept structurally higher landed costs.

CMB Market Insight

The White House’s new focus on transshipment marks a significant escalation in the U.S. effort to enforce its tariff regime and close perceived loopholes in global value chains. For agricultural commodity and food‑industry stakeholders, the key takeaway is not a sudden change in headline tariff rates, but a meaningful shift in enforcement risk and compliance expectations.

Traders and processors supplying the U.S. market should now treat origin verification, supply‑chain mapping and data transparency as core commercial capabilities rather than back‑office tasks. Those able to demonstrate clean, resilient sourcing structures will be best placed to maintain access, negotiate favourable terms and manage volatility as U.S. authorities intensify scrutiny of tariff‑sensitive trade flows.