Fairness, it seems, is a one-way street in the tariff wars. As judged by the White House, it is perfectly appropriate — and perhaps legal — for Donald Trump to impose variable tariffs wholesale on individual nations or even the entire globe, but it is not acceptable for other countries to try to evade those tariffs.

That is the thrust of a 25-page report titled "The Great Transshipment Scam", released last week by the White House Office of Trade and Manufacturing Policy, which is led by trade adviser Peter Navarro. The title signals exactly what the report presents: an alleged anti-American scheme to defraud the United States of tens of billions of dollars in import fees by routing products through third countries that face lower tariffs than the originating nations.

The same facts could just as easily be framed as companies using existing rules to sidestep arbitrarily set trade limits imposed by Trump based on his personal assessment of what a "trade deficit" should look like on a nation-by-nation basis — regardless of whether the United States grows, say, bananas that must be imported.

In short: if China sends an item for U.S. import through Mexico, it is doing so to avoid the tariffs set for Chinese goods. Mexico, under a special — if expiring — trade agreement with the U.S., pays nothing. Add up cars and parts, dishwashers and appliances, and now even trombones and tubas, and Navarro argues the U.S. is being cheated out of billions. Relabeling goods this way is not new: disputes over "rules of origin" — the criteria determining where a product is deemed to come from — have long been a feature of trade enforcement, and U.S. customs authorities have pursued transshipment cases for decades, including during earlier rounds of tariffs on China.

What Navarro never acknowledges, however, is that it is U.S. importers who pay the tariffs — not the Chinese or the Mexicans — and that those costs are passed on to American consumers.

Meanwhile, Trump is threatening global trade altogether if he cannot get his way with the Federal Reserve on lowering U.S. interest rates, a stance that runs counter even to what his own new Fed chair appointee, Kevin Warsh, says is needed to fight inflation that Trump is worsening through unending war and a throttled Strait of Hormuz.

How Transshipment Works

The story is told more effectively by Navarro himself in a New York Times op-ed than in the full report, which is written in bureaucratic language and filled with generalities. Navarro, a Trump policy advisor on trade and manufacturing, previously served jail time for contempt of Congress.

Navarro uses a Vietnamese-made recliner as his example. Its motor is made in China and shipped finished to Vietnam for installation in the chair before the assembled product is sent to Norfolk, Virginia. It is declared a product of Vietnam, erasing 25 percentage points of U.S. tariff that would otherwise be levied — paid, of course, by the American importer. Vietnam is a natural venue for such routing because it has become a major electronics and furniture assembly hub as manufacturers diversified supply chains out of China in recent years.

The report describes a "shadow network of more than 40 countries enabling sleight of hand to deceive American consumers and customs officials about where those countries' exports really originate." The cost exceeds $40 billion a year from China alone, along with decreased U.S. manufacturing jobs, according to Navarro.

In business terms, transshipment reflects multi-country manufacturing, international supply lines, and the ever-present drive to make money — in this case by exploiting a difference in tax rates. "The difference becomes a profit opportunity, and even a business model in its own right," Navarro says. "Ship $1 billion of Chinese goods straight to an American port, and the duty can run to several hundred million dollars. Send the identical goods through Vietnam, Malaysia or Thailand, and most of that bill disappears."

Navarro contends that foreign-built motors and industrial parts shipped to the U.S. rightly should be built in America — the underlying logic of tariffs altogether. But for a variety of reasons, including higher U.S. wages, it is American companies that have been moving manufacturing overseas for decades. Tariffs — again, paid by Americans, not Chinese, Vietnamese or Europeans — are only increasing the cost of supplies not grown or produced in quantity in the United States.

Trump's recent executive order targets the weaknesses that transshippers exploit: shell companies with no U.S. assets, opaque ownership structures, and repeat violators that dissolve and reopen under new names, Navarro notes. Customs and Border Protection is also contracting for a new artificial-intelligence-enabled inspection system, called Detective Border, to assess transshipment risk on every ship leaving every port carrying cargo bound for the United States. How exactly that will work remains an open question.

Right or Might?

Meanwhile, the Supreme Court declared Trump's global tariffs — with their various arbitrary rates tied to national trade imbalances — illegal. Trump has since found new justifications for substitute tariffs that the White House believes will withstand legal challenge. Trump also continues to blast Supreme Court judges for resisting his preferences about what the law or the Constitution should say.

What remains unchanged is that tariffs are contributing to higher prices in the U.S. while not producing a flood of new manufacturing. In cases where manufacturing has returned as promised, the workflows rely heavily on robotics and AI, keeping job creation to a minimum. At the same time, the mass deportation campaign is eliminating labor for the most routine manufacturing jobs.

However high-minded Navarro's argument for exposing trade evasion may sound, it omits the most tangible effects now driving U.S. voters to want to throw out incumbents from both parties at the earliest opportunity.

From the Trump White House, the message to American and international audiences alike is the same: the rules must be such that this White House wins — or everyone else must lose.

Terry H. Schwadron retired as a senior editor at The New York Times, deputy managing editor at the Los Angeles Times, and held leadership roles at The Providence (RI) Journal-Bulletin. He was part of a Pulitzer Gold Medal team in Los Angeles, and his team was part of several Pulitzers in New York.