White House report says China and other nations use transshipment to evade U.S. tariffs
A White House trade report estimates that transshipment of goods through third countries costs the United States $19 billion to $26 billion in lost tariff revenue each year.
The White House released a report on Thursday indicating that exporters are routing products through more than 40 third-party nations to avoid U.S. import duties, resulting in an estimated annual loss of $19 billion to $26 billion in tariff revenue. The analysis highlights China’s practice of sending goods to countries such as Mexico and Malaysia for packaging or limited assembly, a method known as transshipment, which masks the true volume of Chinese imports.
White House trade adviser Peter Navarro told reporters that the scheme allows China to continue expanding its manufacturing sector while appearing to reduce its export figures to the United States. He added that other countries, including India, could employ similar tactics and that upcoming trade policies will include penalties for partners that engage in transshipment.
The report cites a range of estimates for the value of goods transshipped annually, from $34.2 billion to $303 billion, and uses a midpoint figure of $75 billion to calculate the projected loss in tariff revenue. To combat the practice, U.S. Customs and Border Protection is testing an artificial-intelligence-based system that can identify falsified country-of-origin information and apply retroactive tariffs for up to a year after import.
The findings come ahead of a planned September visit by Chinese President Xi Jinping, following President Donald Trump’s May trip to Beijing, and underscore ongoing tensions over trade and manufacturing competitiveness.