The White House on Thursday said in a report the U.S. is losing some US$19 billion to US$26 billion in annual tariff revenue to goods, largely from China, that are transshipped through third countries to avoid U.S. import duties. The report by White House trade and manufacturing adviser Peter Navarro identifies about 40 countries that have an elevated risk of being sources of illegal transshipments of goods, many of which are linked to minimally processing, relabelling and repackaging of Chinese-origin components. The Chinese embassy in Washington said it opposes any party “seeking to strike a deal at China’s expense” or that disrupts industrial supply chains. “Should such situations arise, China will resolutely take necessary measures to safeguard its legitimate rights and interests,” an embassy spokesperson said in an emailed statement. The report from Navarro uses a range of estimates from the private sector and government to try to identify the scale of the problem in terms of the value of transshipped goods: US$34 billion to US$303 billion worth per year. It uses a “central case estimate” of US$75 billion in transshipped goods, on which the US$19 billion to US$26 billion in lost import taxes is based. Routing Chinese products through Mexico or Canada could eliminate duties entirely, the report said. The central US$75 billion case translates to some 450,000 U.S. jobs displaced, both direct and indirect, according to the report. Imports from China fell to a 16-year low of US$308.7 billion in 2025, but imports from Mexico and Vietnam have risen sharply in recent years, according to U.S. Census Bureau data. The report argues that the direct China import drop, fuelled by Trump’s prior tariffs, has helped fuel imports from elsewhere through transshipment. The U.S. Customs and Border Protection agency is now deploying AI tools to better detect suspected transshipment of goods, the report said. Learning models analyze container markings, packaging patterns and X-ray imaging to detect mismatches between declared and actual cargo, it said. (Reporting by David Lawder; Editing by Sonali Paul and Tom Hogue) David Lawder, Reuters
