(Reuters) – The White House said on Thursday the United States is losing annual tariff revenue of about $19 billion to $26 billion on 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 with an elevated risk of being sources of illegal transshipments, many linked to minimal processing, relabeling and repackaging of Chinese-origin components.
- The report ranks India among China’s “biggest enablers”, calling it is a top-tier transshipment-risk jurisdiction. It estimates India, Mexico and Vietnam accounted for about $67 billion in U.S.-bound goods allegedly transshipped from China in 2025, costing an estimated $28 billion in lost U.S. tariff revenue.
- The accusations come as India and the United States hold trade talks. India’s commerce ministry did not immediately comment on the report or say whether it had received U.S. requests to curb alleged transshipment of Chinese goods.
- 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: $34 billion to $303 billion worth per year.
- It uses a “central case estimate” of $75 billion in transshipped goods, on which the $19 billion to $26 billion in lost import taxes is based. Routing Chinese products through Mexico or Canada could eliminate duties entirely, the report said.
- The central $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 $308.7 billion in 2025, but imports from Mexico and Vietnam have risen sharply in recent years, U.S. Census Bureau data show. The report argues that the direct China import drop, fueled 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; Additional reporting by Manoj Kumar in New Delhi; Editing by Sonali Paul and Tom Hogue
