White House Says Tariff Dodging Costs $19B-$26B a Year
A new report says countries are rerouting exports through third nations to skirt U.S. tariffs, with China accused of laundering goods through more than 40 countries.
The White House said in a report released Thursday that countries are routing exports through third countries to avoid U.S. tariffs, costing the government an estimated $19 billion to $26 billion in tax revenue each year.
The report singles out China, saying Beijing responded to tariffs imposed in 2018 by shipping goods to other nations — from Mexico to Malaysia — for packaging and limited assembly, a practice known as transshipping. That made U.S. imports from China appear to fall while allowing China to keep expanding its manufacturing sector in ways that could challenge American factories and jobs.
White House trade adviser Peter Navarro told reporters on a conference call that China is laundering its exports through more than 40 countries, though he said the real issue is other nations enabling the practice. "For years, the great transshipment scam has let communist China launder its exports," Navarro said.
The report arrives ahead of a planned September visit by Chinese leader Xi Jinping. China has described its relationship with the U.S. as one of "strategic stability," even as its export-driving policies have disrupted the auto, metals and electronics sectors in the U.S., Europe, Japan and elsewhere.
Navarro said other countries, including India, could also use transshipping to dodge new tariffs, and said upcoming trade frameworks pursued by the administration will include provisions to penalize partners that engage in the practice.
The report estimated that $34.2 billion to $303 billion worth of goods are transshipped annually, using a central figure of $75 billion to calculate the lost tax revenue. Navarro said U.S. Customs and Border Protection has begun using artificial intelligence in a prototype program to detect transshipments, and importers found to have falsified a good's origin can be retroactively tariffed for about a year back.
Trump's tariffs have faced numerous legal challenges, with the Supreme Court overturning some in February. The U.S. still imports more than it exports overall, though this year's trade imbalance of $371 billion is running about $189 billion lower than during the same period last year.
This article was produced with the assistance of artificial intelligence (AI), in accordance with our editorial policy.
