About $300 billion worth of goods subject to Trump administration tariffs are avoiding the levies annually and reaching the U.S. from Southeast Asia and Mexico, exposing enforcement vulnerabilities just as a review of the North American trade deal is set to begin.

U.S. imports from China plummeted last year as President Donald Trump ramped up tariffs. But shipment-level records analyzed by AI-driven supply chain platform Altana show that, as new duties were imposed and adjusted, businesses often routed goods through Asian countries with lower tariff rates, and onto Mexico, where treatment under the U.S.-Mexico-Canada Agreement offered another opportunity for savings.

Transshipment isn’t necessarily illegal in a global trading system where production and assembly often span multiple economies, and as companies ship goods through major ports to transfer cargo from one vessel to another. 

Component parts from China are increasingly used to make new products in Vietnamese factories, for example, which are later shipped to the U.S. USMCA-related routes aren’t new, either. 

“Millions of USMCA-bound shipments containing goods with travel consistent with rerouting and tariff circumvention have been registered since the agreement was ratified in 2020,” New York-based Altana said in a report released April 23.

Altana, whose technology is used by the U.S. Customs and Border Protection agency for trade enforcement, estimates that suspect transactions in the first 10 months of 2025 surged 76% compared with the same period in 2024, from just over 100 million transactions to 188.5 million.

But the increase in suspicious shipments raises questions about whether goods allowed into the U.S. underwent any required changes at each stop in their journey to actually qualify for preferential treatment under the USMCA.

The issue hinges on complex “rules of origin” that govern which country — and tariff rate — apply to a shipment of goods. In order to qualify as Vietnamese, for example, intermediate goods from China must meet a “substantial transformation” standard upon export to the U.S.

“Altana’s transshipment detection algorithm traces facility-level supply chain relationships to identify paths where goods move from an origin to an intermediary to a final destination without evidence of substantial transformation. It indicates that some of this activity was likely illegal transshipment,” the company said.

Reshoring, Self-Sufficiency

Among the biggest goals of Trump’s tariffs are the permanent reshoring of production to the U.S. and a structural reduction in America’s reliance on Chinese factories. 

Altana’s analysis, though, suggested “rerouting in response to tariffs is not being accomplished by building new capital-intensive supply chain relationships, but has instead involved more goods rerouting being pumped through established networks of suppliers, facilities and actors.”

In a hearing on trade policy on April 22, House Ways and Means Committee Chairman Jason Smith touted a 32% drop in the U.S.-China goods trade deficit he said was due to the Trump’s tariffs. But he also noted that trade policy isn’t always incentivizing an American manufacturing renaissance.

“I’ve had CEOs of several large businesses tell me in recent weeks that it would be better to locate major manufacturing facilities in Mexico because under USMCA rules, they are able to import many more of their component parts tariff-free, then bring the finished product into the United States tariff-free as well,” Smith said.

The Trump administration is already considering potential changes to North American trade rules that would raise tariff costs on U.S. automobile imports, and push manufacturers to boost domestic production. And Mexico raised its own tariffs on certain goods from China at the end of 2025. 

In December, U.S. Trade Representative Jamieson Greer told an Atlantic Council forum that bilateral trade deals help the U.S. address transshipment issues and that USMCA discussions would need to look at non-auto rules of origin. “There are going to be certain areas where a trilateral discussion could make sense — rules of origin being one of them,” he said.

Canada’s chief trade negotiator Janice Charette told a Canadian Chamber of Commerce summit in Ottawa on April 21 that she anticipated trilateral talks, for instance on automotive rules of origin, with bilateral agreements in addition to the “underlying” deal.

For progress on the USMCA review, Canada wants to revisit Trump’s sectoral tariffs hitting key export sectors like steel, aluminum and autos, first.