Three Latin American governments that have taken steps against Chinese commercial interests over the past year have been named in a White House report accusing Chinese exporters of routing goods through third countries to evade US tariffs. Mexico, Panama and Colombia have joined Brazil, Argentina, Chile, Peru, Costa Rica and the Dominican Republic on a list of more than 40 countries identified as carrying an elevated risk of illegal transshipment.
The report, titled “The Great Transshipment Scam”, argues that Chinese exporters responded to US tariffs introduced in 2018 by moving shipments through third countries, where light assembly, relabelling or changes in documentation could disguise their original source and allow goods to enter the United States under a different origin and a lower duty.
The allegations have significant implications for Latin America, where Chinese trade and investment have expanded while governments have sought to maintain access to the US market. Mexico imposed tariffs of up to 50 per cent on Chinese cars in December, ahead of the review of the United States-Mexico-Canada Agreement. Panama’s Supreme Court annulled concessions held by Hong Kong’s CK Hutchison at both ends of the Panama Canal in January, triggering an arbitration claim of more than US$2 billion and a freeze on Chinese state investment. Colombia imposed a 35 per cent duty in March on steel and metalworking imports from countries without a trade agreement, primarily affecting its largest supplier, China.
Washington has increasingly sought to make transshipment a focus of its trade policy. Executive Order 14326, signed in July 2025, introduced a 40 per cent penalty duty on goods that US Customs and Border Protection determines were diverted to evade tariffs. The order also requires the US Commerce and Homeland Security departments to publish lists every six months identifying countries, entities and facilities involved in transshipment.
The White House report divides countries into three risk categories. Mexico is placed alongside Canada, the European Union, India, Israel, Japan, South Korea and Taiwan in the highest tier. Brazil is in a middle tier, while the other Latin American countries are classified as “opportunistic targets”, associated with free zones, ports, bonded warehousing or limited customs enforcement capacity.
Trade specialists, however, have questioned whether the report’s classification necessarily demonstrates wrongdoing. Diego Marroquin Bitar of the Centre for Strategic and International Studies said transshipment was a genuine threat to US industrial capacity, American jobs and government revenue, but argued that the report sometimes appeared to treat the scale of a country’s trade as evidence of complicity.
Mexico and Canada, he noted, operate under the USMCA framework, which contains regional content thresholds, labour provisions and wage requirements. Central American partners operate under comparable arrangements, while several South American economies do not have equivalent rules governing their trade with Washington.
China’s economic importance to the region is substantial. China accounted for 28.7 per cent of Brazil’s exports last year, worth US$100 billion and more than two and a half times what Brazil exported to the United States. China is also the leading buyer from Chile and Peru. Chinese investment has accompanied this trade, including US$1.3 billion invested in the deep-water port at Chancay in Peru and manufacturing plants being developed by Chinese carmakers across the region.
The report specifically identifies Mexico as one of three leading global hubs through which the US Commerce Department traced about US$67 billion in Chinese goods entering the American market last year. It also acknowledges that changes in US import sourcing since 2018 do not prove that all displaced Chinese trade was illegally diverted.
Marroquin Bitar argued that US trade calculations risk overlooking the integrated nature of regional manufacturing. Roughly three-quarters of every dollar of Mexican manufactured exports to the United States originates in North America, he said, meaning that American labour and value can return to the United States inside products classified as imports.
The report comes six weeks before US President Donald Trump is due to host Chinese President Xi Jinping in Washington next month. At the same time, the USMCA review is under way after Washington declined an automatic extension, while Brazil has filed for consultations at the World Trade Organization over US tariffs that its trade ministry says affect 23.1 per cent of Brazilian exports to the US market.
The report ultimately identifies a challenge extending beyond tariffs: determining what is actually inside goods crossing borders. Marroquin Bitar described this as a “visibility gap” between what customs authorities can assume about a shipment and what they can verify, arguing that improving that visibility through technical cooperation could provide a more targeted response than treating entire countries as accomplices.
