Now Reading: US flags $26 bn tariff hole as China reroutes exports
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US flags $26 bn tariff hole as China reroutes exports
A new US report says the Trump White House is losing $19 billion to $26 billion a year in tax revenue because countries route exports through third nations to avoid tariffs. The…
The Story in Brief
A new US report says the Trump White House is losing $19 billion to $26 billion a year in tax revenue because countries route exports through third nations to avoid tariffs. The practice, called transshipping, is used by China to send goods via Mexico, Malaysia and others for packaging or limited assembly, making imports appear from those countries instead. Trade adviser Peter Navarro called it the "great transshipment scam" and claimed China launders exports through over 40 nations.
The Trump administration is now using artificial intelligence in a pilot programme to detect transshipping. Navarro said importers found falsifying origins can be retroactively tariffed for up to a year. The report comes ahead of a planned September visit by Chinese President Xi Jinping. It also notes that India and other countries could employ similar tactics, and that new trade frameworks will penalise such practices.
The Indian Opinion
The US narrative of China cheating on tariffs is predictable, but it ignores the real cost of the tariffs themselves, higher prices for American consumers and legal defeats in the Supreme Court. Meanwhile, China's export rerouting is a rational response to punitive trade barriers. The real test will be whether AI-driven enforcement actually captures evasion without escalating into a broader trade war that hurts both economies. Can Washington honestly say that protecting a few industries is worth the damage to global supply chains?
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
