White House Admits It’s Losing Up to $26 Billion a Year as China Dodges Trump’s Tariffs

The Trump White House released a report Thursday estimating that the U.S. is losing between $19 billion and $26 billion a year in tariff revenue because countries are routing Chinese exports through third nations to avoid duties, a practice known as transshipping [1]. The report’s mid-range estimate is built on roughly $75 billion in illegally transshipped goods moving through the system between February 2025 and February 2026 [2]. White House trade adviser Peter Navarro told reporters China is “laundering” its exports through more than 40 countries, from Mexico to Malaysia, calling it “the great transshipment scam” [3].

Why It Sucks:

Trump Administration and Tariff Hawks

• China is gaming the system, they say. Navarro frames the transshipment network as a deliberate 40-country evasion scheme designed to let Beijing keep growing its manufacturing base despite U.S. tariffs [3].
• The numbers justify tougher enforcement. The administration’s own $19-26 billion estimate is being used to argue for expanded customs enforcement and stricter rules of origin [1, 2].
• Jobs are on the line. The report argues the transshipping pattern lets Chinese manufacturing keep challenging U.S. factories and employment even as headline import numbers from China appear to drop [2].

Free-Market Conservatives and Trade Economists

• The tariffs created the loophole. Skeptics argue the report is itself evidence that steep tariff differentials just incentivize evasion rather than reshoring production, undermining the policy’s stated goal [2].
• Billions are being spent chasing a moving target. Economists note that a 45% tariff differential could mean losses as high as $136 billion annually, suggesting enforcement will perpetually lag behind evasion [2].
• The White House is grading its own homework. Critics point out the loss estimate comes from the administration’s own report defending its tariff program, not an independent audit [1].

U.S. Importers and Consumers

• Supply chains face new uncertainty. Businesses that legally source goods from Mexico, Malaysia and other transshipment-linked countries now face heightened customs scrutiny over a scheme they may have no part in [3].
• Enforcement crackdowns could raise prices further. Tighter rules-of-origin enforcement aimed at closing the loophole risk adding cost and delay for importers already navigating existing tariffs [1, 2].
• Consumers pay either way. Whether tariffs are evaded or enforced, businesses say the added compliance costs and pricing uncertainty tend to land on the same store shelves [2].

Sources & Citations:

[1] AP via ABC News: White House says it’s losing $19B-$26B a year in revenue as countries dodge tariffs
[2] PBS News: Trump White House says it’s losing $19B-$26 billion a year in revenue as countries dodge tariffs
[3] Agri-Pulse: White House reports China tariff loses due to illegal transshipping