The Great Transshipment Scam
- Annkaren Wambui
- 2 days ago
- 5 min read
Updated: 8 hours ago
šWhat the White House's "Great Transshipment Scam" Report Means for U.S. Importers
Summary: The White House has published The Great Transshipment Scam: Rise, Scope, and Costs, a report on the challenges of illegal transshipment, country of origin fraud, and tariff evasion in international trade. It highlights enforcement agencies' focus on detecting tariff evasion through false origin declarations, minor processing, and complex supply chains. For importers, manufacturers, and customs professionals, the report offers insights into future customs approaches to origin verification and supply chain transparency. |
Why Origin Matters More Than Ever
A Certificate of Origin remains an important customs document, but the report suggests that customs authorities are likely to look well beyond the certificate itself.
According to the report, enforcement increasingly focuses on whether goods have genuinely undergone substantial transformation, rather than simply being:
Relabelled
Repackaged
Re-invoiced
Subject to minor processing
Accompanied by revised documentation
Where these activities do not amount to substantial transformation, claims regarding country of origin may receive closer scrutiny.
For businesses, this reinforces an important principle: country of origin claims should always be supported by robust manufacturing records and evidence demonstrating how origin was determined.
Documentation Should Tell a Complete Story
Commercial invoices, packing lists and transport documents remain essential, but increasingly they may represent only part of the evidence customs authorities expect to see.
A well-prepared importer should be capable of demonstrating a consistent audit trail covering:
Supplier sourcing
Manufacturing activities
Production records
Material inputs
Shipping movements
Commercial transactions
Payment records
When documentation presents a clear and consistent picture of the supply chain, businesses are generally better positioned to respond efficiently to customs enquiries and post-clearance audits.
Data Analytics Are Transforming Customs Enforcement
Perhaps one of the most significant themes within the report is the growing role of technology in customs enforcement.
The report discusses the use of:
Data analytics
Routing analysis
Production capacity assessments
Ownership mapping
AI-assisted risk targeting
Trade pattern analysis
These tools are intended to help customs authorities identify unusual trading patterns before physical inspections even occur.
For compliant businesses, this means enforcement is becoming increasingly intelligence-led rather than inspection-led.
Understanding Substantial Transformation
Determining the correct country of origin is rarely as straightforward as identifying where a shipment was exported.
In many cases, customs authorities consider whether manufacturing activities carried out in a country resulted in a substantial transformationĀ of the product.
Simply carrying out activities such as:
Packaging
Sorting
Simple assembly
Relabelling
Administrative processing
may not be sufficient to establish a new country of origin for customs purposes.
Importers should therefore ensure that origin determinations are based on the applicable customs rules and supported by appropriate documentation.
Strong Supply Chain Governance Is Becoming a Competitive Advantage
The report also highlights the growing importance of understanding supply chains beyond immediate suppliers.
Importers should consider whether they have sufficient visibility over:
Manufacturing locations
Production capacity
Component sourcing
Related-party relationships
Logistics routes
Supporting customs documentation
Maintaining this level of visibility not only supports customs compliance but can also improve risk management and supply chain resilience.
Practical Steps Businesses Can Take
In light of the report, businesses may wish to review whether they can readily demonstrate the basis for their customs declarations.
Consider reviewing:
Country of origin determinations
Supporting manufacturing documentation
Supplier due diligence procedures
Record-keeping practices
Customs valuation documentation
Internal compliance procedures
Post-clearance audit readiness
Being prepared before questions arise is generally more effective than attempting to reconstruct documentation during a customs enquiry.
Official Sources
Office of the United States Trade Representative (USTR) ā Press Releases
CBP ā Rules of Origin Guidance
The White House, Office of Trade and Manufacturing Policy, The Great Transshipment Scam: Rise, Scope, and CostsĀ (August 2026).Ā
š„ Download the Official White House Report
To complement this article, we have included the official White House report, The Great Transshipment Scam: Rise, Scope, and Costs, which examines the growing risks associated with illegal transshipment, country of origin fraud and tariff evasion.
The report provides valuable insight into current U.S. enforcement priorities, the increasing use of data analytics and AI in customs risk assessment, and why businesses should strengthen origin verification, supply chain due diligence and customs documentation.
Studying the report can help importers, exporters and trade compliance professionals better understand the evolving enforcement landscape and prepare more effectively for future customs scrutiny.
Download the report below.
Final Thoughts
The White House report does not suggest that every international transaction is problematic. Rather, it signals that customs enforcement is becoming increasingly sophisticated, data-driven and focused on verifying the substance behind customs declarations.
For importers, the message is clear: maintaining accurate origin analysis, comprehensive documentation and transparent supply chain records is becoming an increasingly important part of effective customs compliance.
Businesses that invest in strong customs governance today will be better positioned to respond confidently to tomorrow's enforcement environment.
š„Ā CBP Form 28 & Form 29 Explained
In this video, Customs ManagerĀ explains the purpose of CBP Form 28 (Request for Information)Ā and CBP Form 29 (Notice of Action), helping U.S. importers understand what these forms mean and how to respond effectively. Learn when U.S. Customs and Border Protection (CBP) may request additional information, how customs classification, valuation and origin can become the focus of an enquiry, and why maintaining accurate customs records and supporting documentation is essential for demonstrating compliance. Whether you're an importer, customs broker or trade compliance professional, this practical guide will help you better understand the customs post-entry process and prepare for CBP enquiries with confidence.
Need Help Strengthening Your Origin & Supply Chain Compliance?
At Customs Manager Ltd, we help businesses strengthen customs compliance and reduce origin-related risks through:
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Assess origin determinations, verify substantial transformation and strengthen compliance with U.S. customs requirements.
Supply Chain Due Diligence
Review supplier documentation, manufacturing records and supply chain processes to improve transparency and support origin claims.
Customs Compliance Reviews
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Author
Ann Karen | Head of Growth
Updated: August 2026
Related Topics:
#CountryOfOrigin #RulesOfOrigin #TradeCompliance #CustomsCompliance #ImportCompliance #SupplyChain #SupplyChainManagement #CBP #TradeEnforcement #TariffClassification #CustomsValuation #InternationalTrade #TradeIntelligence #DueDiligence #CustomsManager
Disclaimer
This article is provided for general informational purposes only and does not constitute legal, customs or tax advice. Businesses should seek professional advice based on their individual trading arrangements and compliance obligations.
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