The White House recently released a provocatively titled report, The Great Transshipment Scam, formally making the prevention of origin laundering a key economic and trade policy priority. The report accuses Chinese companies of circumventing high U.S. tariffs on Chinese goods through transshipment via third countries, repackaging, minor processing, or document alterations. More importantly, U.S. tariff policy has expanded beyond determining how much tax to impose on a product. It now encompasses supply chain governance, including where the product originated, who controls its supply chain, and where critical production processes were completed.
Companies with Extensive Ties to Chinese Supply Chains Must Strengthen Proof of Origin
Da-Nien Liu, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research (CIER), said the report also highlights a contradiction in the Trump administration’s tariff policy. After the United States imposed Section 301 tariffs on China in 2018, China’s share of U.S. imports declined, while some trade gradually shifted to third countries. Although this partly reflects normal trade diversion, the widening tariff gap between China and third countries also gives companies greater incentives to circumvent tariffs through those countries. In other words, the higher the tariff wall, the stricter origin verification must become.
The United States is gradually institutionalizing measures to prevent origin laundering, beginning with stricter rules of origin. Anti-transshipment provisions have started to appear in the reciprocal trade agreements recently signed by the United States. When granting future trade preferences, the United States may no longer require only market access. It may also require trading partners to demonstrate that their exports have sufficient local manufacturing content, domestic value added, and supply chain transparency.
Customs enforcement is also shifting from examining documents to scrutinizing entire supply chains. The report proposes using AI to integrate freight data, shipping routes, factory capacity, and other information to determine whether companies possess genuine production capabilities. The United States is also strengthening importer accountability and disclosure requirements for affiliated companies. Future customs inspections will examine not only the port from which goods were shipped, but also where the products underwent substantial transformation.
Origin Laundering Prevention Is More Than a Customs Issue: Supply Chain Transparency Becomes Critical to Taiwan’s Export Competitiveness
Taiwan should note that the United States has incorporated country-of-origin risks into its supply chain management. The White House has placed eight economies—Taiwan, Canada, the European Union, Japan, Mexico, South Korea, India, and Israel—in its highest-risk Tier 1 category. These economies have close ties to Chinese supply chains and are major exporters to the United States. Tier 1 classification does not mean that the United States has determined that they are involved in illegal origin laundering. Rather, it reflects their larger flows of China-linked goods and the resulting need for greater scrutiny of product origins. For Taiwan, the key concern is not being labeled a hub for origin laundering. It is that products exported to the United States may face stricter requirements for origin traceability, substantial transformation, and supply chain transparency.
Liu said the United States has not yet announced any major penalties involving origin laundering by Taiwanese businesses, but the relevant inspection mechanisms are gradually becoming institutionalized. Taiwan has extensive ties to Chinese supply chains, and many products exported to the United States contain components, raw materials, or intermediate goods from China. Even companies that are not involved in origin laundering may therefore face more stringent proof-of-origin requirements. U.S. authorities may focus on component origins, processing procedures, value added, and supplier information. Simple assembly, testing, labeling, or packaging is also less likely to qualify as substantial transformation sufficient to change a product’s country of origin.
Taiwan should therefore stop treating origin laundering prevention solely as a customs enforcement issue. It should address the matter at the broader levels of industrial policy and Taiwan-U.S. economic and trade relations. The government must strengthen its ability to trace import origins, manufacturing processes, and export destinations. Companies should maintain comprehensive bills of materials and documentation of raw material origins, manufacturing processes, costs, and value added. Businesses that rely heavily on Chinese components but export primarily to the United States should assess their country-of-origin risks in advance.
Liu said the Trump administration is extending its tariff policy into supply chain governance. Future access to the U.S. market will depend not only on a product’s final place of manufacture, but also on whether its supply chain is traceable and its critical production processes are substantive. For Taiwan, preventing origin laundering is no longer merely a matter of complying with customs rules. It is also essential to preserving the credibility of the “Made in Taiwan” label. As the United States begins looking through supply chains to trace product origins, Taiwan’s ability to demonstrate substantive manufacturing and genuine local value creation will directly affect its ability to retain access to the U.S. market.
Source: Da-Nien Liu (August 25, 2026). Trump’s Second Tariff Wall. United Daily News. https://udn.com/news/story/7340/9711747