Business & Markets
White House estimates tariff rerouting costs U.S. $19 billion to $26 billion a year
The report centers on China-linked trade and a practice known as transshipment, while customs officials test new enforcement tools.
Executive summary
- The estimate: The White House put annual tariff-revenue losses from suspected rerouting at $19 billion to $26 billion.[1][2]
- The baseline: The report used a central estimate of $75 billion in transshipped goods, within a much wider cited range of $34.2 billion to $303 billion.[1]
- The route: Officials said Chinese goods have moved through more than 40 countries, sometimes receiving limited assembly or new packaging before entering the United States.[1][2]
- The enforcement: U.S. Customs and Border Protection is testing artificial intelligence to flag suspect trade patterns and can assess duties retroactively when origin records are falsified.[1]
The White House says the United States is losing an estimated $19 billion to $26 billion in tariff revenue each year because exporters route goods through third countries to disguise their origin. The report released Thursday focuses heavily on China-linked trade and the widening incentives created when tariff rates differ sharply by country.[1][2]
The practice, commonly called transshipment, can involve moving products through another country for packaging or limited assembly before they enter the United States under a different declared origin. The report traces the pattern back to tariffs imposed in 2018 and cites routes involving countries from Mexico to Malaysia.[1]
The size of the activity is uncertain. The report cited estimates ranging from $34.2 billion to $303 billion in goods each year and used $75 billion as its central case for calculating forgone revenue. Those figures are estimates of suspicious or redirected trade, not a count of shipments individually proven to be fraudulent.[1][2]
White House trade adviser Peter Navarro said China-linked exports were moving through more than 40 countries. He placed responsibility on the countries enabling the rerouting, while the report's broader context also shows how higher and uneven tariff rates increase the financial reward for mislabeling origin.[1][2]
Customs and Border Protection has begun testing an artificial-intelligence prototype to identify risky supply-chain patterns, according to the administration. Officials can impose duties retroactively when an importer is found to have falsified origin records, but the report does not establish how much of the estimated revenue gap the new system will recover.[1]