Press Briefing: Peter Navarro Speaks to Reporters Outside the White House - August 13, 2026

All right, fire this up. Let me know when you're ready. I'm Peter Navarro. I'm the White House Senior Counselor for Trade Manufacturing, and I'd like to have a little conversation today about something that's called The Great Transshipment Scam. This is a report released by my Office of Trade and Manufacturing Policy.

You can see, uh, a Trojan horse on the cover, um, and it's a symbol of The Great Transshipment Scam, which is essentially a scam involving the movement of higher tariff goods. We put tariffs on a country like China. They move them surreptitiously over to a lower tariff country, Vietnam, Mexico, Cambodia, more than 40 countries around the world.

And it comes in to the United States, it's a substantially lower tariff. It's called The Great Transshipment Scam. Uh, I've uncovered, uh, more than 40 countries. More than 40 countries are involved in facilitating this Great Transshipment Scam. And every time they get away with it, uh, it's money that would otherwise, uh, go to the US Treasury.

It's jobs that would otherwise be here in America. It's tax revenues from the growth associated. So, what I'm gonna do is just quickly walk you through, uh, the report. It's, um, on the White House site, whitehouse.gov, The Great Transshipment Scam. So the way this starts is with the observation that, uh, every country in the world is allowed to cheat us under the World, World Trade Organization rules.

And that, that should just blow your mind to begin with. The rules of the WTO allow other countries of the world to charge us higher tariffs, erect higher non-tariff barriers, and there's nothing we can do about it, except for Donald Trump and his reciprocal tariffs program that he's putting in place. I was in the first term with the boss from day one to the last day.

Uh, about midterm of the first term, we put in place section 301 tariffs on China to defend America against their predatory practices. The, the dumping, the intellectual property theft, uh, the currency manipulation, the state subsidies. They are the, the, the worst of the worst in terms of predatory trade practices.

We put in place these tariffs. The tariffs have done well, very well protecting American workers and American, uh, factories, but China immediately began devising schemes to evade the tariffs through transshipment. The forms of transshipment are three, with the most obvious is when, uh, you have a container full of crates and the crates they made in China on them.

And they'll go to a place like Vietnam, uh, or the Philippines, uh, and they'll just switch the label. And because, say, Vietnam has a lower tariff than China, um, that's tariff arbitrage. They save, like, millions and millions of dollars in tariffs they would otherwise, uh, have. And I would refer you also to The New York Times op-ed today on this.

That's a, that's a, an easy read. It's a good read, and you'll see it. And the example there is kind of interesting, uh, so I'll pay a little homage to the New York Times here. Um, you start with a recliner, like a lot of you have, uh, have recliners at home. Uh, you enjoy recliners, you recline, and a motor takes it down and motors run some, some of the massage stuff and things like that.

Um, and Vietnam actually has real recliner factories, where they make the furniture part of the recliner. But what Vietnam also does is imports the motors from China to run the recliner. And, in too many cases, when Vietnam ships a alleged made in Vietnam recliner to the United States, on the customs forms, they report that the motor was also made in Vietnam, when it was not.

And we catch, we can begin to catch them doing exactly those kinds of things. So, um, the, the second big way that, um, transshipment takes place, uh, is through what I call crewdriver factories. That's where China will ship a boatload literally of parts over to, uh, a country and, um, they'll have a facility that takes those parts and with a screwdriver and a pliers and, uh, just a few tools, they'll assemble it in a way which doesn't meet the threshold of what's called substantial transformation.

It's just a screwdriver factory. And they send it, and it, and they evade the tariffs. And the third way is that some countries like Cambodia have these free trade zones where they get preferential treat- -- treatment on tariffs. Um, and China goes into them and sends us stuff and, and it's, and, and that's another way they do it. So what I do in this study is I get the estimates of the level of transshipment.

I looked at five different estimates, two government, three private sector. Uh, and the estimates of the annual transshipment flows are astonishing. Uh, they're in the range of 40 to 60 billion dollars a year, very conservative. It's more, more likely $100 billion or more. Uh, within the government, it was the Council of Economic Advisors and the Department of Commerce outside the government.

Um, it was Goldman Sachs. Uh, it was a firm called Altana. And, uh, my favorite is a firm called Exeger, which is a AI enabled firm, um, which, uh, is doing a, a, a, a really good job in terms of helping root out a lot of this, uh, transshipment. So here's the thing. So we estimate in this report, The Great Transshipment Scam, we start with, uh, what the flow is, the annual flow.

Uh, and then from there, we know what the tariff rates of, say, China are, the high tariff rate versus the lower tariff rates of other countries. And it's that spread that leads the arbitrage. And we calculate how much tariff revenues that we lose every year. And the, the, the base case is about $25 billion lost every year to the great transshipment scam and to the shadow transshipment network of these 40 plus countries.

Now, that's an abstract number, but I can tell you it's enough to, perhaps ironically, fund the entire budget of customs and border protection. It's enough to fund the entire budget of the Department of Agriculture. It's enough to fund the Space Force. And it's enough to fund half of the entire army budget.

So these are big dollars, uh, that matter. Now, um, what are we doing to crack down on this scheme? Uh, before I tell you that in the big reveal, I also wanna tell you about the job effects. Besides the tariff revenue effects, uh, we do this kind of fun little analysis of what I call the ugly sister city comparison.

Y'all know about sister cities, right? They're the, they're the feel good ones where Denmark matches up, uh, with Minneapolis. Uh, we have a, a, a city in, in Denmark match up with one in Min- -- in, uh, Minnesota and they cultural exchanges and all of this kind of stuff like that. The ugly sister city thing is when you have a product that's transshipped to a city, um, in, say, Vietnam.

Ho Chi Minh City, for example. Um, and then it comes here and what I can show with the ugly sister city comparisons is how when the transshipment takes place with a motor or a switch or whatever it is, uh, there's jobs lost in, in, in, in Cleveland or Toledo, uh, or, or cities all around America. And that's, that's what's at stake here.

Now, here's what we're doing about this. It's a three-pronged attack. Last month, just a few weeks ago, in fact, President Trump signed an executive order which allows customs and border protection to be much more muscular about cracking down on transshipment and illicit activities. And CBP is doing that as we speak.

The second thing we're doing, which, which is truly remarkable, uh, requires a little bit of history. In the old days, when you were trying to bust exporters for illegal drugs or illegal transshipping, smuggling and all that, it came down to humans with green eye shades, uh, and paper forms that were coming, uh, from, from foreign countries.

Um, but as the level of trade has increased so much, it's been like a tsunami, and we simply can't handle that in real time. So what we're, what we're doing is moving to what's called an AI, an artificial intelligent e- -- enabled. Well, we're moving to an AI enabled detective border. Artificial intelligence enabled detective border, so that now we can have eyes on every ship and every container at every port around the world getting ready to come to us. And it, at the speed of the scam, we can assess the probability that some of that is trans-shipped goods.

So that when it arrives at the US port, you know, b- -- b- -- Baltimore or LA or anywhere in between, we're ready to bust them and, uh, get the money that, that they, uh, that they owe America. And what's interesting about this, and I didn't know this till I began working with CBP closely. Is once we just find one shipment from a company evading tariffs through transshipment, we can basically recover tariff revenues for the whole calendar year.

So this is gonna run into the billions. We're rapidly scaling this up. Um, the warning to the world, higher tariff countries, stop doing this, we're gonna catch you. Lower tariff countries don't enable this. And the lower tariff countries have a particular warning here because the third portion of our enforcement is at the United States trade representative level.

The big picture here is that with the Trump tariffs that have been, um, imposed. Or the reciprocal tariffs, because these people cheat, make no mistake, they cheat us. Um, what every country in the world is trying to do now is, is negotiate a way out of those higher tariffs. And the only way they're gonna do it is by lowering their tariffs and giving us a better deal.

But, but there's also an important clause now in every one of those trade deals that Jamieson Greer, the US trade representative, uh, is negotiation. And he's a visionary. Jamieson Greer, the USTR, is the most visionary USTR we've ever had. And one of the visions he's seen is to put in those reciprocal trade deals, something that's never been in trade agreements before.

This is the right and the ability to impose penalties, not just if countries violate the letter of the law and transship, but also the spirit of the law. So we're cracking down hard. That's the great transshipment game. And, uh, go to whitehouse.gov and you can read all about it. You can also check it out in the op-ed in today's online edition of the New York Times, and tomorrow it'll be in the print edition.

Uh, thank you for listening. I'll take a few questions now. Yes, ma'am.

So, so what's [Inaudible]

Um, that's a USTR function. Uh, but I don't have enough fingers on my hands to tell you how many there are. It's, it's a very, very active negotiation. And I would just, I mean, it's no secret either, just call USTR, they'll tell you.

And do you think those tariffs will come down to zero?

No, I, we'll never have zero tariffs 'cause, 'cause, uh, they cheat us so bad. And there's just so many things embedded. Um, and, um, w- -- w- -- all we're trying to do here is level the playing field so the American workers and American businesses compete fairly. And we're about as far from that as I am from San Diego right now.

Okay? Yes, ma'am. Anything? All right, we're good. Thank you.

Thank you sir.

Hey, Fran, thank you for doing it.