MALAYSIA and Indonesia have been accused by the White House of being among more than 40 countries allegedly used by China to circumvent high United States tariffs by routing goods through countries with lower import duties before they enter the US market.
The allegations were contained in a 24-page White House report titled “The Great Transshipment Scam”, which accused China of systematically redirecting exports through third countries, including by relabelling the country of origin even when the goods or their components originated in China.
More than 40 countries and the European Union were identified in the report, including Malaysia, Indonesia, Canada, Mexico and Japan.
Foreign news agencies reported that the White House estimated the practice involved about US$60 billion (RM243 billion) in trade, although estimates from the US Government and private-sector sources have put the value of goods potentially diverted to avoid tariffs at between US$40 billion (RM162 billion) and US$303 billion (RM1.23 trillion).
White House Office of Trade and Manufacturing Policy Director Peter Navarro accused China of developing sophisticated methods to redirect exports after US President Donald Trump began imposing tariffs on Beijing in 2018.
“For years, this transshipment scam has allowed communist China to ‘launder’ its exports through more than 40 countries, costing us tens of billions of dollars and stealing the wages of American workers,” he said.
The report placed Indonesia and Malaysia, alongside Vietnam, in its Tier 2 category, describing them as countries with “significant illicit transshipment volumes and deep ties to China-related supply chains, input sourcing and logistics systems”.
“Given their proximity to China, it is unsurprising that many Southeast Asian nations play a critical role in the network, from Cambodia, Indonesia and Malaysia to Thailand and Vietnam,” the report said.
Washington singled out Indonesia’s Batam-Bekasi corridor as one of the key centres of the alleged transshipment network.
The report claimed that increased handling of China-linked goods, particularly plastic boxes and crates moving through Indonesia, had put pressure on US packaging companies in Houston, Lake Charles, Beaumont and Tulsa.
The White House said the practice was costing the US tens of billions of dollars in tariff revenue each year as exporters exploited differences between tariff rates imposed on Chinese goods and those applied to products from other countries.
Washington is also turning to technology to detect potential tariff evasion, with US Customs and Border Protection deploying an artificial intelligence-based system known as “Border Detective” to identify product content more accurately and verify declared countries of origin for tariff purposes.
The White House warned that the practice could extend beyond China, saying other countries facing higher US tariffs could also seek to reroute exports through third countries.
Indonesia has yet to issue an official response to the latest allegations.
The accusations put Jakarta in a delicate position as China remains one of its largest economic partners, while Indonesian goods entering the US are currently subject to a 10% tariff following an investigation alleging that Jakarta had failed to prevent imports linked to forced labour. - August 21, 2026
