US tariff revenue loses up to $26 billion annually to transshipment via third countries, White House estimates
GeopoliticsMacro
In a report released on the 13th, the White House estimated that the United States is losing roughly $19 billion to $26 billion in tariff revenue each year due to transshipment, in which mainly Chinese products are exported to the US through third countries to evade tariffs. The report was compiled by Peter Navarro, Senior Counselor to the President for Trade and Manufacturing, and identified around 40 countries at high risk of serving as origin points for illicit transshipment. In these countries, Chinese-made components are sometimes subjected to minimal processing, relabeling, or repackaging before being exported to the US with a changed country of origin. According to the report, estimates of transshipment based on private and government data range widely from about $34 billion to $303 billion annually, but the report assumes a central case of $75 billion per year in transshipment and, on that basis, estimates that $19 billion to $26 billion in annual tariff revenue is being lost. It states that tariffs may be completely avoided when Chinese products are imported through Mexico or Canada. The report suggests that $75 billion in annual transshipment is linked to the loss of roughly 450,000 US jobs, directly and indirectly combined. Based on US Census Bureau data, imports from China fell to $308.7 billion in 2025, the lowest level in 16 years, while imports from Mexico and Vietnam have risen sharply in recent years. The report argues that while direct imports from China have declined due to the Trump administration's tariffs on China, transshipment through third countries may have expanded. According to the report, US Customs and Border Protection is now deploying an AI-powered monitoring system to strengthen detection of transshipment, with machine learning models analyzing container labeling information, packaging patterns, and X-ray images to detect discrepancies between declared contents and actual cargo, thereby advancing the identification of illicit imports.
