Trump White House estimates $19B-$26B annual loss to tariff evasion via transshipping

The Trump White House has disclosed a significant structural weakness in its tariff strategy: according to PBS NewsHour reporting, the administration estimates it loses $19 billion to $26 billion each year in tariff revenue as countries circumvent duties through a practice known as transshipping.

Goods, particularly from China, are being rerouted through intermediary nations for packaging and limited assembly before reaching the U.S. market, allowing them to enter at lower tariff rates or avoid duties altogether. According to the Washington Post, more than 40 nations participate in routing goods away from tariffs, though Mexico and Malaysia have emerged as principal transshipment hubs.

The pattern began after 2018 tariff increases, according to PBS NewsHour reporting. Rather than absorb new duties, Chinese suppliers shifted supply chains to send unfinished goods to third countries, where minimal processing occurs before export to the United States. The goods then enter as products of their transshipment country rather than their country of origin, circumventing tariff classifications tied to China.

This gap between intended and realized tariff impact reveals what the administration itself now acknowledges: the tariff system as constructed cannot prevent goods from changing jurisdictional ownership during transit. The White House has identified the problem. The brief does not specify what policy response or enforcement mechanism the administration intends to deploy to close the gap.