Transshipment in the tariff evasion context means routing goods manufactured in a high-tariff country through a third country such as Vietnam, Mexico, or Malaysia, then re-exporting them to the United States with falsified country-of-origin documentation. The goods may receive minimal processing in the transit country; the purpose is to misrepresent origin on U.S. Customs entry documents and avoid antidumping or countervailing duties.
CBP enforces country-of-origin rules under the "substantial transformation" test: goods must undergo a fundamental change in character or use in the claimed country of origin to qualify for that origin. Transshipped goods that receive only minor processing don't meet this standard and are subject to full duty assessment and False Claims Act liability. An AI trade platform analysis estimated that transshipment cost the U.S. $38 billion in lost tariff revenue in 2025.
CBP's Enforce and Protect Act (EAPA) process, enacted in 2016, provides a formal investigation mechanism for transshipment allegations. Domestic companies that suspect a competitor is transshipping can file an EAPA petition with CBP, which can result in suspension of the competing imports pending investigation.
When Congress imposes tariffs on goods from a specific country, transshipment lets exporters effectively nullify those tariffs by changing the paper trail. Without robust origin verification, trade enforcement policy can be rendered meaningless — domestic producers pay full costs while foreign competitors route around them.
Transshipment is sometimes confused with legitimate third-country manufacturing, where goods are genuinely produced in the transit country. The legal distinction is substantial transformation — genuine manufacturing changes the product's character; transshipment merely changes its paperwork.
When Congress imposes tariffs on goods from a specific country, transshipment lets exporters effectively nullify those tariffs by changing the paper trail. Without robust origin verification, trade enforcement policy can be rendered meaningless — domestic producers pay full costs while foreign competitors route around them.
Transshipment is sometimes confused with legitimate third-country manufacturing, where goods are genuinely produced in the transit country. The legal distinction is substantial transformation — genuine manufacturing changes the product's character; transshipment merely changes its paperwork.