‘Transshipment scam’ is not a global conspiracy but a warning to the US
The White House’s accusation that over 40 nations are involved in a shadow network that harms the US betrays a misunderstanding of how trade works
Titled “The Great Transshipment Scam”, the front cover of the 25-page document features a Trojan Horse digitally composed of cargo containers. If the contents of those containers are from China, does this mean that America is Troy?
The document suggests that this “illegal” trade activity amounts to annual values ranging from US$40 billion to a staggering US$303 billion. Such a massive disparity in estimates renders the figures largely meaningless, serving more as political theatre than rigorous economic analysis. Behind these inflated numbers lies the argument that this trade activity has cost the United States hundreds of thousands of jobs and substantial gross domestic product growth.
However, this narrative collapses under scrutiny. The manufacturing jobs in question were moved offshore by American companies decades ago – not merely to China, but to nations including India, Bangladesh and Vietnam. To blame these countries, and specifically China, for the consequences of American domestic corporate strategy is disingenuous. Washington cannot hold other nations responsible for the hollowing out of its own manufacturing base, a trend that American corporations themselves accelerated in their pursuit of cheaper labour.
The timing of the publication is also relevant, coming a month before Chinese President Xi Jinping is scheduled to visit Washington for a summit with US President Donald Trump. Americans would be better off negotiating in good faith rather than playing such recurrent tricks ahead of major leadership summits.
Underlying this entire protectionist crusade is a fundamental flaw: the belief that trade barriers could force “reshoring” and create “safe” supply chains independent of China. This perspective ignores the reality of global market interdependence. Suppliers, wholesalers and distributors worldwide are simply responding to economic incentives, finding ways to bypass trade barriers that impede global commerce. Furthermore, at a time when inflation is already eroding the purchasing power of the American consumer, the attempt to force expensive, alternative supply chains is a recipe for further economic strain.