White House says transshipped goods cost $19 billion to $26 billion in lost tariffs

• The report estimates $34 billion to $303 billion worth of goods are transshipped annually, with a central estimate of $75 billion on which the lost tariff calculations are based
• Chinese imports to the U.S. fell to a 16-year low of $308.7 billion in 2025, while imports from Mexico and Vietnam have risen sharply, suggesting tariff evasion through transshipment
• U.S. Customs and Border Protection is deploying AI tools that analyze container markings, packaging patterns, and X-ray imaging to detect mismatches between declared and actual cargo

White House Report: Transshipped Goods Cost U.S. $19-26 Billion in Lost Tariffs

The White House released a report Thursday estimating the U.S. loses $19 billion to $26 billion annually in tariff revenue from goods—primarily of Chinese origin—illegally transshipped through third countries to evade import duties.

Key Findings:

White House trade adviser Peter Navarro's report identifies approximately 40 countries at elevated risk for facilitating illegal transshipments. These operations typically involve minimal processing, relabeling, and repackaging of Chinese-origin components before routing them through countries like Mexico, Canada, or Vietnam to avoid U.S. tariffs entirely.

Financial Impact:

The report estimates total transshipped goods range from $34 billion to $303 billion annually, with a "central case estimate" of $75 billion. This baseline figure translates to the $19-26 billion in lost tariff revenue and approximately 450,000 displaced U.S. jobs (direct and indirect).

Trade Pattern Shifts:

U.S. Census Bureau data shows Chinese imports fell to a 16-year low of $308.7 billion in 2025, while imports from Mexico and Vietnam surged. The report attributes this shift partly to transshipment schemes designed to circumvent tariffs implemented during the Trump administration.

Enforcement Response:

U.S. Customs and Border Protection is deploying artificial intelligence tools to combat transshipment fraud. These AI learning models analyze container markings, packaging patterns, and X-ray imaging to identify discrepancies between declared and actual cargo.

Market Implications:

The findings suggest significant revenue leakage undermining U.S. trade policy effectiveness and highlight growing complexity in global supply chains as companies seek to navigate tariff regimes. Increased enforcement could disrupt current trade flows and impact companies relying on third-country routing strategies.