As per the latest revelation from the White House trade and manufacturing adviser Peter Navarro, the United States is losing annual tariff revenue of about USD 19 billion to USD 26 billion on goods, largely from China, that are transshipped through third countries to avoid American import duties.
Navarro has found around 40 countries that are likely to be involved in illegal transhipments, often due to simple processing, relabelling, and repackaging of parts from China.
The report ranks India among China’s “biggest enablers,” calling the South Asian giant a top-tier transhipment-risk jurisdiction. Along with India, Mexico and Vietnam accounted for about USD 67 billion in US-bound goods allegedly transshipped from China in 2025, costing an estimated USD 28 billion in lost tariff revenue.
While Navarro’s accusations come amid the ongoing trade talks between New Delhi and Washington, the Narendra Modi administration has maintained strategic silence over the development.
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 told Reuters.
Navarro’s report used 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, estimated between USD 34 billion and USD 303 billion per year.
The study did a “central case estimate” of USD 75 billion in transshipped goods, on which the USD 19 billion to USD 26 billion in lost import taxes is based.
“Routeing Chinese products through Mexico or Canada could eliminate duties entirely,” the report added further.
“The central USD 75-billion case translates to some 450,000 U.S. jobs displaced, both direct and indirect,” Navarro’s estimates claimed.
“Imports from China fell to a 16-year low of USD 308.7 billion in 2025, but imports from Mexico and Vietnam have risen sharply in recent years,” Census Bureau data show.
Navarro argued that the direct China import drop, fueled by Trump’s prior tariffs, has helped fuel imports from elsewhere through transhipment.
“The US Customs and Border Protection agency is now deploying AI tools to better detect suspected transhipment of goods. Learning models analyse container markings, packaging patterns and X-ray imaging to detect mismatches between declared and actual cargo,” the report concluded.