The White House Office of Trade and Manufacturing Policy (OTMP) published the report “The Great Transshipment Scam: Rise, Scope, and Costs”, through which The United States government is analyzing the diversion of goods through third countries to evade applicable tariffs and has identified more than 40 jurisdictions associated with a high risk of illegal transshipment.
The report defines illegal transshipment or “transshipping” as the routing of goods originating in countries with higher tariffs to jurisdictions with lower tariffs, with the purpose of obtaining tariff treatment that would not apply if the true origin of the goods were declared. Among the practices described are the relabeling, repackaging, rebilling, minor processing, false country of origin declarations, and other documentary changesThe document distinguishes between production nodes, where light assembly, finishing, testing, marking, packaging or integration of components that do not constitute a substantial transformation for customs purposes are carried out, and logistics nodes, in which the main activity consists of routing, consolidation, storage, documentary changes or re-export under new documentation.
The report organizes the identified jurisdictions using two complementary classifications. The first grouping takes them into three tiers based on the scale of trade linked to China, the depth of integration with Chinese supply chains, and the presence of what the document calls weak link advantages. Tier 1 comprises large trading partners with diversified industrial bases, where the risk would be embedded within legitimate, high-volume trade flows; Tier 2 includes economies with significant volumes and greater integration with China; and Tier 3, the largest, corresponds to economies of smaller absolute volume but with conditions that, according to the report, would make them attractive for rerouting.
The second classification does not consider scale but rather the operational function that each country would fulfill within the network, and distinguishes between assembly microhubs in Southeast Asia, the processing belt of Central and Eastern Europe, and maritime gateways of Special Foreign Trade Regimes and re-export, the land-based nodes associated with the Belt and Road Initiative, Latin American corridors, African peripheral hubs, and developed logistics platforms. A single country can be classified at one level of the first category and simultaneously fulfill one or more roles in the second. The report specifies that both categories were constructed based on analyses by the Council of Economic Advisers (CEA), the Department of Commerce, and the private firm Exiger, and that they reflect general risk criteria rather than individual country-specific findings.
How is Colombia ranked in the OTMP report?
Within the first classification according to the scale of trade linked to China, Colombia is classified within the Tier 3, “Small, Opportunistic Chinese Targets”: economies with lower absolute transshipment volumes, but with advantages for China, defined by the report as “low-cost labor, Special Foreign Trade Regimes, port or border access, customs warehouses, niche assembly capacity, preferential access to the US market, or limited customs control capacity.”
Within the second classification of risk countries presented in the report, which refers to the operational function that each country would fulfill within the network, Colombia is included in the “Latin American Corridors” functional cluster: whose role is included as “Rerouting through the Pacific and Atlantic, customs-controlled storage and regional assembly, together with Argentina, Brazil, Chile and Peru.”
The report does not provide individual figures, specific cases, companies, tariff classifications, or ongoing investigations for Colombia. Nor is Colombia mentioned in the methodology known as "ugly sister cities" as one of the locations identified as negatively impacting manufacturing and direct employment in U.S. cities.
Loss of US tariff revenue as a result of “Transshipping”
Regarding the magnitude of the phenomenon, the report compiles five annual estimates ranging from USD 40.000 billion to USD 303.000 billion. Goldman Sachs estimates USD 40.000 billion using 2023 data; the CEA calculates a range of USD 34.200 billion to USD 89.600 billion, with the midpoint rounded to USD 60.000 billion used in the report; Exiger estimates USD 75.000 billion based on USD 51.100 billion in directly identified shipments between February 2025 and February 2026 in 27 countries; the Department of Commerce’s Office of Trade and Economic Analysis (OTEA) sets a trade transfer benchmark of USD 109.000 billion across 459 six-digit Harmonized System (HS6) product categories; and Altana calculates a maximum exposure of USD 303.000 billion. The document itself warns that these figures are not additive or directly comparable to each other.
Using a more restrictive approach, based on transactional data and exact matches of eight-digit HS8 codes between imports from China and exports to the United States from the same region and in the same quarter, the OTEA estimated that USD 67.000 billion would be transshipped through Mexico, India, and Vietnam in 2025, resulting in a loss of tariff revenue of USD 28.000 billion, implying an effective tariff differential of approximately 42%. For calculating these tax losses, the report applies illustrative differentials of 25%, 35%, and 45%, based on the assumption that the average tariff applicable to goods of Chinese origin is close to 50 %. Under those assumptions, annual revenue losses would range from USD 10.000 billion to more than USD 100.000 billion.
The document also warns that these differentials are conservative because they do not incorporate antidumping and countervailing duties (AD/CVD), which are additional and product-specific. Examples cited include Chinese aluminum wire and cable, with dumping margins between 58,51% and 63,47%, and quartz surface products, with dumping margins as high as 336,69%. Based on this, the report underscores the role of the Enforce and Protect Act (EAPA), a mechanism that allows Customs and Border Protection (CBP) to investigate the circumvention of AD/CVD orders through routing through third countries or misrepresentations of origin, as well as undervaluation practices in related-party transactions.
Regarding macroeconomic effects, the report assumes 6.000 jobs lost for every $1.000 billion increase in the trade deficit. Under its central scenario of a $75.000 billion annual increase, it estimates 450.000 jobs lost, a reduction in GDP of between $113.000 billion and $150.000 billion, and federal revenue losses of between $19.000 billion and $26.000 billion. It also reports that, comparing 526-day periods before and after the change in administration, shipments with inconsistencies detected after the lifting of restrictions increased by 245% (from 93.744 to 323.677), and associated settlements grew by 169%, from $9.600 billion to $25.800 billion.
In light of these findings, the report describes the control measures already adopted and those under development. Among these, the following stand out: Executive Order 14411 on strengthening customs enforcement, which tightens the requirements applicable to Importers of Record, Customs guarantees, the holding of assets in U.S. territory, disclosure of ownership and business affiliations, the "good standing" requirement and the sanctions regime; the provisions on rules of origin incorporated in the Reciprocal Trade Agreements (Agreements on Reciprocal Trade), aimed at preventing the benefits of these agreements from being transferred to third countries; and the development of a “Border Detective” Based on artificial intelligence, designed to cross-reference shipping data, route histories, tariff classification, ownership structures and productive capacity indicators, in order to differentiate legitimate foreign investment from mere transit.
The product lines identified as higher risk include electric motors, generators, transformers, and static converters (headings 8501 to 8504), integrated circuits (854239), circuit switching and protection devices (8536), pumps and compressors (8413 and 8414), plastic manufactures (392690) and plastic packaging and containers (392310), thermostats (903210), insulated conductors and cable assemblies with connectors (854442), and parts of electric motors and generators (850300). A relevant methodological criterion for operators is Exiger's use of a 90-day dwell time threshold as an indicator of single-pass transit versus genuine manufacturing.
The report is a public policy document and not a legally binding regulation, and therefore does not create direct obligations for Colombian exporters. However, exporting companies are advised to proactively review the traceability of their inputs and the documentation supporting their certificates of origin, as well as monitor the regulations that the Department of Homeland Security and CBP will issue in the coming months pursuant to Executive Order 14411.
Source:
Extraordinary Bulletin: Trade Policy and Defense Unit, August 13, 2026
