White House Report Raises Concerns South Korea's Semiconductor Belt Could Be Used as Route for Illegal Transshipment of Chinese Goods

The White House has officially identified South Korea's 'Gyeonggi Province semiconductor belt' as a route for the illegal transshipment of Chinese products. On Tuesday (local time), the Trump administration claimed that China reduces its tax payments to the U.S. by routing goods through third countries like South Korea and Japan, arguing that this results in an annual tax revenue loss of approximately $20 billion to $27 billion. This trend comes as the Trump administration slaps average 50% high tariffs on Chinese goods, leading to an increase in export circumvention cases.

The report previously criticized Chinese integrated circuits for being disguised as U.S.-made products after undergoing assembly or repackaging in low-tariff third countries, such as the Gyeonggi semiconductor belt. It further argued that this puts pressure on U.S. semiconductor production hubs in Phoenix and Austin.

To detect transshippment aimed at tariff evasion, the White House is building an AI-based 'Detective Border' system. White House Trade Adviser Peter Navarro stated that if transshipment is detected, tariffs can be levied retroactively on the offending company's annual volume. Navarro added that while this report is separate from the ongoing Section 301 investigation, it will be used as reference material in future trade negotiations with various countries.