White House Points to South Korea in China’s 'Shadow Transshipment Network'... Gyeonggi Semiconductor Belt Highlighted

South Korea Classified as 'Tier 1' for High Volume of China-Linked Goods
Gyeonggi Semiconductor Belt Identified as Potential Transshipment Route
White House: "AI Crackdown to Be Strengthened"

The White House has claimed that China has established what it calls a "shadow transshipment network," utilizing more than 40 countries—including South Korea—to circumvent high U.S. tariffs. In particular, it identified South Korea as being among the major countries at risk for transshipment of Chinese-related goods, and singled out Gyeonggi Province's semiconductor belt as a potential route through which Chinese-linked integrated circuits could enter the United States.

In its report, "The Great Transshipment Scam," the White House Office of Trade and Manufacturing Policy, released on August 13 (local time), estimated that the scale of illegal transshipment could reach up to $303 billion (KRW 431 trillion) annually and highlighted these concerns.

According to the report, transshipment fraud refers to instances where Chinese-made products are sent not directly to the U.S., but to third countries with lower tariffs, where minor processing, repackaging, relabeling, or assembly transforms them into goods ostensibly originating from those countries before being shipped on to the United States.

The United States currently imposes an average tariff rate of 50% on Chinese exports, but if Chinese products are routed through countries such as Mexico or Canada, which are parties to the United States–Mexico–Canada Agreement (USMCA), tariffs can fall to 0% or close to it.

The report analyzed that a global network linking production facilities, logistics platforms, free trade zones, bonded warehouses, processing hubs, and re-export centers has been established for this purpose. It noted that more than 40 countries—including key U.S. trading partners such as South Korea, Japan, the European Union (EU), Canada, and Mexico—are involved in this network.

However, the White House cautioned that it cannot definitively conclude that all reductions in Chinese exports are due to illegal transshipment merely because China’s share of U.S. imports has declined and these other countries’ shares have increased. It acknowledged that some of these trends reflect legitimate trade shifts, such as the relocation of production bases, investment, and supply chain diversification.

South Korea Included in 'Tier 1'; Gyeonggi Semiconductor Belt Mentioned

The White House classified each country into three tiers based on factors such as the volume of trade with China, integration with supply chains, and conditions conducive to circumvention exports. South Korea was placed in "Tier 1," alongside Canada, the EU, India, Israel, Japan, Mexico, and Taiwan.

Under the designation of "Diversified Scale Leaders," these countries are characterized by a high absolute volume of China-related products, a diverse industrial base, and substantial export platforms directed toward the U.S.

The report explained that, for these countries, there is a possibility that illegal transshipment may be mixed in with otherwise normal trade flows. It specifically mentioned that the semiconductor belt in Gyeonggi Province, South Korea, could potentially function as a “conduit” for China-linked integrated circuits (HS 854239). In such a scenario, it claimed that semiconductor manufacturing in U.S. locations such as Phoenix, Austin, Portland, and San Jose could come under pressure.

However, the report clarified that these comparative analyses are illustrative and meant to highlight potential exposure to illegal transshipment; they do not cover all possible cases. It does not mean that actual illegal transshipment of Chinese semiconductors has been detected in South Korea.

White House: "Illegal Transshipment Could Reduce Jobs" ... AI-Based Crackdown to Be Strengthened

The White House Council of Economic Advisers (CEA) estimated the scale of potential illegal transshipment to be between $34.2 billion and $89.6 billion, with the report citing a median value of approximately $60 billion. The U.S. Department of Commerce calculated the broader scale of trade diversion at $109 billion, and separately projected the amount of illegal transshipment through major hubs in 2025 to be about $67 billion.

Assuming an annual illegal transshipment figure of $75 billion under a mid-range scenario, the White House estimated that approximately 450,000 U.S. jobs could be directly and indirectly replaced, and annual gross domestic product (GDP) could decline by $113 billion to $150 billion. The report stressed, however, that these figures are estimates based on economic modeling and do not represent an actually observed decrease in employment.

In response, the Trump Administration is stepping up monitoring of transshipment utilizing artificial intelligence (AI). The White House disclosed that U.S. Customs and Border Protection (CBP) is developing an AI-driven "Detective Border" system. Through this technology, it intends to distinguish legitimate foreign direct investment and supply chain transfers from illicit forms of routing or changes in country of origin.

This content was produced with the assistance of AI translation services.