White House says tariff evasion costs the United States billions in lost revenue
The White House has warned that the United States may be losing between $19 billion and $26 billion in tariff revenue each year as foreign exporters increasingly use third countries to circumvent American trade restrictions.
A new administration report claims that some countries are rerouting goods through other markets before they enter the United States. The practice, commonly known as transshipment, can make products appear to originate from a country that is not subject to the same tariffs as the original exporter.
According to the report, China expanded the use of this method after the United States introduced new tariffs in 2018. Chinese goods were reportedly sent to countries including Mexico and Malaysia, where some products underwent packaging, assembly or other processing before being shipped to the American market.
White House trade adviser Peter Navarro said China has been routing exports through more than 40 countries. He argued that the issue extends beyond China, accusing other countries of facilitating practices designed to avoid U.S. tariffs.
The report estimates that the annual value of goods potentially involved in transshipment could range from $34.2 billion to $303 billion. Using a central estimate of approximately $75 billion in affected trade, the administration calculated that the United States could be missing substantial tax and tariff revenues.
The White House also warned that tariff avoidance could undermine the effectiveness of U.S. trade policy by allowing foreign manufacturers to maintain access to the American market despite higher duties imposed on their products.
India and other major trading partners could also face greater scrutiny if similar practices are identified. The administration has indicated that future trade agreements could include provisions allowing the United States to penalize countries that facilitate tariff evasion.
To strengthen enforcement, U.S. Customs and Border Protection has reportedly begun testing artificial intelligence tools designed to identify suspicious transshipment patterns. Authorities may also impose tariffs retroactively when importers are found to have falsified certificates of origin.
The issue adds another layer of tension to the already complex trade relationship between Washington and Beijing. It also highlights the growing importance of customs enforcement as the United States seeks to protect domestic industries and ensure that tariffs imposed on foreign goods are effectively collected.
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