White House Transshipment Report Signals Increased Scrutiny of Country-of-Origin Claims

On August 13, 2026, the White House Office of Trade and Manufacturing Policy released a report titled “The Great Transshipment Scam.” The report outlines the Trump administration’s broad definition of transshipment and appears to signal the administration’s plans for increased customs enforcement and possible plans to change rules related to country of origin as a means to target allegedly China-linked supply chains.

The report does not impose new tariffs or change existing country-of-origin rules. It does, however, provide insight into the administration’s enforcement and policy priorities, including its criticism of existing country-of-origin standards and its planned use of artificial intelligence (AI) and other tools to identify potential transshipment and tariff evasion.

For consumer products companies, the report signals increased enforcement activity by Customs and Border Protection (CBP) related to country-of-origin and preferential-origin claims made pursuant to trade agreements, including the U.S.-Mexico-Canada Agreement (USMCA). This means import transactions are likely to receive increased scrutiny, particularly for products manufactured through multi-country supply chains or incorporating significant Chinese-origin inputs. To reduce compliance risk, companies should review country-of-origin and preferential treatment claims for their import portfolios and ensure documentation is up to date.

White House Flags Broad “Shadow Transshipment Network”

The report identifies more than 40 countries associated with allegedly elevated illegal transshipment risk and divides them into three descriptive tiers:

• Tier 1, “Diversified Scale Leaders,” includes Canada, the European Union, India, Israel, Japan, Mexico, South Korea, and Taiwan. The report describes these jurisdictions as having large volumes of China-linked goods alongside diversified industrial bases and major U.S.-bound export platforms.
• Tier 2, “Scale Leaders with Significant Economic Integration with China,” includes Brazil, Turkey, and several major Southeast Asian trading partners, including Indonesia, Malaysia, Thailand, and Vietnam, that the report describes as more deeply integrated into China-linked supply chains, manufacturing platforms, and regional rerouting channels.
• Tier 3, “Small, Opportunistic Chinese Targets,” includes a broader group of smaller economies that the report says may offer advantages for rerouting, such as low-cost labor, free zones, port access, bonded warehousing, niche assembly capacity, preferential U.S. access, or more limited customs enforcement.

The report uses a broad concept of “China-linked goods” to attempt to define transshipment risks. In addition to raising concerns about third-country manufacturing that relies on Chinese-origin inputs and components, the report identifies Chinese ownership or financing, supplier relationships, China-based production steps, routing histories, and other evidence of China-linked trade-flow as transshipment risk factors.

The report’s focus is of particular concern for companies that have responded to U.S. tariffs on China by moving production to other countries. The report discusses traditional transshipment concerns, such as deceptive rerouting of goods and third-country packaging, relabeling, warehousing, re-invoicing, and documentation changes. However, it also focuses on shifting of production, calling out in particular “limited assembly” or “finishing hubs.” In addition, it also criticizes the existing country-of-origin framework as complex and heavily dependent on case law and calls on Congress to amend and codify origin standards. The report itself, however, does not alter those standards.

The administration also signals a more data-driven enforcement approach. The report highlights existing authorities, such as the Enforce and Protect Act (EAPA), and describes an AI-enabled enforcement initiative under development called the “Detective Border.” According to the report, the system would combine information regarding trade flows, routing, ownership, production capacity, component content, and other supply-chain data to identify potentially high-risk shipments. The report appears to signal significantly increased enforcement risk for companies that have China-origin inputs in their supply chains. To minimize risk and be prepared to respond to CBP inquiries, importers should review and update supply chain documentation, country-of-origin determinations, and analysis supporting claims for preferential treatment under the USMCA or other trade agreements.

Trade Diversion Versus Illegal Transshipment

One notable tension in the report is the distinction between lawful changes in supply chains and unlawful transshipment.

The report acknowledges that legitimate changes in production, investment, sourcing, and supply chains are distinct from illegal transshipment. At the same time, several of the assertions in the report about transshipment risk are based on changes in trade flows following the imposition of U.S. tariffs on China. The use of trade-flow information as a proxy or screening indicator for possible transshipment creates particular risk for imports from countries such as Vietnam and Mexico, which saw increased exports to the United States as companies shifted supply chains away from China.

Some of the report’s broader rhetoric blurs the distinction between lawful trade diversion, such as relocation of manufacturing or changing suppliers, and unlawful country-of-origin claims. Many companies that have lawfully diversified supply chains by moving sourcing, production, or assembly away from China may now face increased CBP scrutiny.

Key Takeaways for Consumer Products Companies

The report does not change the governing country-of-origin rules, but it sends a signal that country-of-origin and FTA preferences are active and growing enforcement priorities. Consumer products companies with multi-country or China-connected supply chains may want to consider the following steps:

• Review country-of-origin determinations. Companies relying on manufacturing, assembly, finishing, or other processing in a third country should confirm that the factual record supports the claimed country of origin under the applicable legal standard.
• Evaluate preferential-origin claims. Companies claiming preferential treatment under the USMCA or other free trade agreements should ensure that sourcing and production records adequately support those claims.
• Assess supply-chain documentation. Companies should review and update documentation to substantiate manufacturing activity in third countries. This might include records such as bills of materials, production records, production-capacity information, supplier documentation, purchases of necessary inputs, and routing information.
• Pay particular attention to less clear-cut origin positions. Companies whose substantial-transformation or FTA eligibility determinations depend on limited assembly, finishing, packaging, or other relatively modest processing may face heightened scrutiny even though the underlying legal standards have not changed.
• Monitor potential changes to origin rules. The report expressly calls for Congress to amend and codify country-of-origin standards. Any future legislation or regulatory changes could make it more difficult to establish third-country origin for goods incorporating significant Chinese inputs or undergoing relatively limited processing outside China.

Companies should consider consulting counsel or trade advisors to ensure interpretations supporting their country-of-origin or preference claims are valid. In addition, companies considering significant investments in third-country production operations may want to give additional consideration to possible changes in laws and regulations, as well as possible future shifts in agency interpretations of origin issues to better avoid future compliance concerns.

If you have any questions, please reach out to the authors or any of their colleagues on Arnold & Porter’s Consumer Product Safety team.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.