Three Latin American governments that moved against Chinese commercial interests over the past year were named in a White House report on Thursday, which accused Chinese exporters of routing goods through third countries to evade US tariffs.
Mexico, Panama and Colombia now join Brazil, Argentina, Chile, Peru, Costa Rica and the Dominican Republic among more than 40 countries the report says carry elevated risk of illegal transshipment, the practice of moving goods through an intermediate country so they enter the US under a different origin and a lower duty.
Previously, the three Latin American countries appeared to support the Trump administration during the relentless US-China trade war.
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 (USMCA).
Panama’s Supreme Court annulled the concessions held by Hong Kong’s CK Hutchison at both ends of the canal in January, drawing an arbitration claim of more than US$2 billion and a freeze on Chinese state investment.
Colombia applied a 35 per cent duty in March on steel and metalworking imports from countries without a trade agreement, the ceiling permitted under World Trade Organization (WTO) rules and aimed principally at its largest supplier, China.
Countries identified as engaging in illegal transshipment face concrete costs at the US border.
Washington has included anti-transshipment clauses in its recent trade agreements. Executive Order 14326, signed in July, 2025, applies a 40 per cent penalty duty to goods that US Customs and Border Protection determines were diverted to evade tariffs, in place of the reciprocal rate that would otherwise apply.
The order also requires the US Commerce and Homeland Security departments to publish a list every six months that names countries, entities and facilities involved in transshipment.
Chinese exporters accused of moving shipments through third countries
The Office of Trade and Manufacturing Policy, the White House unit run by Peter Navarro, produced the 25-page document titled “The Great Transshipment Scam”. It argues that Chinese exporters responded to the 2018 tariffs by shifting shipments through third countries, where light assembly, relabelling, or changes in paperwork could disguise the goods’ origin.
That the rerouting is happening is not what specialists on regional trade dispute. Diego Marroquin Bitar, a fellow with the Americas Programme at the Centre for Strategic and International Studies (CSIS) and on the USMCA initiative, said the practice does real damage.
“Transshipment is a genuine threat to US industrial capacity, to American jobs, and to revenue collection. That case does not need to be argued,” he said.
But his disagreement begins at the next step, where the report treats the size of a country’s trade as grounds for calling it an accomplice.
It places Mexico and Canada in a tier of large trading partners, where it says the risk is embedded within broad, legitimate trade flows, a classification Marroquin Bitar said describes scale rather than conduct.
What separates the two countries from others on the list, he said, is the rule book they already trade under.
“Mexico and Canada operate inside a framework with the United States that carries strict regional content thresholds, labour provisions, and wage requirements,” he said, adding that Central American partners work under comparable terms in their own agreements.
No comparable set of content and labour rules covers the South American countries on the list, whose trade has tilted the other way over the same period.
China took 28.7 per cent of Brazil’s exports last year, worth US$100 billion and more than two and a half-times what Brazil shipped to the US, according to trade ministry figures. It is also the leading buyer from Chile and Peru.
Chinese capital has also moved with the trade, from the US$1.3 billion of Chinese investment in the deep water port at Chancay in Peru to the plants Chinese carmakers are building across the region.
The report was released six weeks before US President Donald Trump is due to host Chinese President Xi Jinping in Washington next month.
The USMCA review is under way after Washington declined an automatic extension, and Brazil filed for consultations at the WTO last month over US tariffs that its trade ministry says amount to 23.1 per cent of Brazilian exports to the American market.
The report sorts the countries it names into three tiers of risk, and the region is spread across all of them.
Mexico ranks at the top, alongside Canada, the European Union, India, Israel, Japan, South Korea and Taiwan. Brazil sits in the middle tier with countries like Turkey and Vietnam. The other seven fall into a lower tier of what the report calls “opportunistic targets” defined by free zones, port access, bonded warehousing, or limited customs enforcement capacity.
Only three of the nine are tied to particular goods anywhere in the document. Mexico’s Guanajuato-Queretaro corridor is matched to electric motors, generators, transformers and static converters under tariff headings HS 8501 to 8504, set against Detroit, Grand Rapids and Indianapolis.
Costa Rica’s Limon-Moin corridor appears under heading HS 850300, covering electric motor and generator parts, opposite Dallas-Fort Worth and Oklahoma City.
And the Dominican Republic’s Caucedo-Haina corridor covers insulated conductors and cable assemblies, weighed against Portland, Seattle and Spokane.
Report claims US loses whenever the foreign hub wins
The report calls these pairings the ugly sisters of a zero-sum trading system and argues that the US loses whenever the foreign hub wins. Marroquin Bitar said the arithmetic rests on an assumption that does not hold.
“That only holds if you assume every motor built in Queretaro would otherwise have been built in Michigan, and it would not have been. The realistic alternative is Asia, not Detroit,” he said.
Roughly three-quarters of every dollar of Mexican manufactured exports to the US originates in North America, he said, describing US labour and US value returning home inside goods that are counted as imports.
“The job in Michigan depends on the one in Queretaro,” he said.
The report applies the same reasoning to Central America, counting permissive free-zone rules among the weak-link advantages that draw Chinese rerouting.
In Costa Rica, those zones are the core of its export economy. The regime accounts for about 15 per cent of national output, three-quarters of foreign direct investment and more than 265,000 jobs, according to 2024 figures from the state trade agency Procomer.
San Jose concluded talks in May to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, part of a push to widen its export markets.
Panama is named without any product line, grouped with Costa Rica and the Dominican Republic in a category of maritime gateways alongside Malaysia, Oman and the United Arab Emirates.
The report said only that Panama and Costa Rica offer maritime access, free-zone logistics, and re-export platforms, and did not identify any Panamanian facilities, products, or volumes.
The five South American countries named are placed in a category the report calls Latin American Corridors, its function given as Pacific and Atlantic re-routing, bonded warehousing and regional assembly.
Brazil singled out in document as US ramps up pressure
The largest economy in the group, Brazil, appears four times in the document, three of which are in lists that name it and nothing more. The single descriptive sentence says it serves, with Turkey, as a larger regional platform capable of supporting re-routing or transformation claims in selected product categories. Which categories, the report does not say.
Mexico is the only economy in the region carrying a dollar figure. The report ranks it among three leading hubs worldwide, with India and Vietnam, through which the US Commerce Department traced about US$67 billion in Chinese goods into the American market last year.
The report qualifies its own figures in several places in the text. It said the shift in US import sourcing after 2018 does not prove that all displaced Chinese trade was illegally diverted.
It also puts the annual value of the trade anywhere between US$40 billion and US$303 billion across five analyses it says are not directly comparable; and presents its estimates of 450,000 American jobs and up to US$150 billion in output as model-based illustrations.
Navarro said on a call with reporters that anti-transshipment terms would form part of the administration’s trade negotiations and that countries found to be rerouting goods would face penalties.
Those qualifications point to where Marroquin Bitar said the document is on firmer ground: the difficulty of knowing what is actually inside a shipment.
“What needs closing is the visibility gap,” he said, describing the distance between what customs authorities can assume about a good crossing a border and what they can verify.
“Closing that gap is a technical problem with a technical answer, and the partners best positioned to solve it alongside Washington are the ones already building things with US firms.” -- SOUTH CHINA MORNING POST
