White House Targets $67B in Transshipped Freight, Proposes AI Border Screen

How much freight is being transshipped to dodge U.S. tariffs?

A White House trade report released August 18 estimates that approximately $67 billion in U.S.-bound goods was transshipped through Mexico, India, and Vietnam in 2025, costing the Treasury about $28 billion in lost tariff revenue. The report identifies more than 40 countries as presenting elevated transshipment risk and calls for an AI-enabled enforcement system to distinguish legitimate nearshoring from pass-through trade.

Transshipment works by routing goods through lower-tariff countries, then relabeling, repackaging, re-invoicing, or performing limited processing before shipment to the United States. The practice can create the appearance of a new country of origin without meeting the customs threshold for substantial transformation, according to the report.

The study frames the issue as an outgrowth of the trade shifts that followed the first Trump administration's 2018 Section 301 tariffs on Chinese goods. China's direct share of U.S. goods imports fell after the tariffs, while the combined share of imports supplied by identified transshipment-risk countries rose.

What the numbers show

The report draws on five government and private-sector analyses to place potential annual transshipment or trade-transfer exposure in a range from approximately $40 billion to $303 billion. The estimates use different methodologies and are not additive.

Under the narrow $40 billion case, the report calculates foregone tariff revenue of roughly $10 billion to $18 billion. Under the $75 billion central case, the range is about $19 billion to $34 billion. The broad $303 billion exposure scenario yields a range of $76 billion to $136 billion, although the report characterizes that as an upper-bound exposure measure rather than a direct estimate of illicit trade.

The Commerce Department analysis cited in the report separately estimated that approximately $67 billion in U.S.-bound goods was transshipped through Mexico, India, and Vietnam in 2025 under a stricter transaction-matching methodology. That estimate implied about $28 billion in lost tariff revenue.

Manufacturing impact

Beyond customs revenue, the report estimates that tariff evasion widens the effective trade deficit and displaces domestic production. Using its central $75 billion case, it estimates 450,000 direct and indirect jobs displaced, annual GDP losses of $113 billion to $150 billion, and federal revenue losses of $19 billion to $26 billion.

The study connects selected foreign hubs and product categories to U.S. industrial corridors. It cites Mexico's Guanajuato-Queretaro region as a possible staging point for electric motors, generators, transformers, and static converters that compete with production centered around Detroit, Grand Rapids, Michigan, and Indianapolis.

It similarly links Vietnam's Ho Chi Minh City corridor to electrical switching equipment made in the Chicago-Milwaukee-Rockford region, and Malaysia's Penang-Kulim cluster to plastic-products manufacturing in Akron, Canton, and Upstate South Carolina.

The AI enforcement proposal

The report calls for an AI-enabled "Detective Border" that would combine shipment data, routing histories, ownership relationships, product classifications, production-capacity indicators, and anomaly detection to help U.S. Customs and Border Protection identify high-risk entries.

The proposed system would be designed to distinguish legitimate foreign investment and nearshoring from pass-through trade. It envisions using link analysis, component and capacity verification, computer vision, container imaging, and matched trade flows to flag potentially false origin claims or suspicious movements through free zones and bonded warehouses.

The report also points to Executive Order 14411, signed June 3, 2026, as the enforcement framework intended to make importers more accountable through tougher bonding, domestic-asset, ownership-disclosure, business-affiliation, and good-standing requirements, along with stronger penalties and greater trade transparency.

Countries flagged

The report identifies more than 40 countries as presenting elevated transshipment risk. The countries range from major trading partners with broad industrial bases such as Mexico, Canada, the European Union, India, Japan, South Korea, and Taiwan to manufacturing and logistics centers such as Vietnam, Malaysia, Thailand, Indonesia, Brazil, and Turkey.

Smaller countries with free zones, bonded warehouses, strategic ports, lower-cost labor, or limited customs-enforcement capacity also figure prominently in the report's risk map.

The report cautions that the pattern of reallocated trade does not prove all of it was illegal, since some reflects legitimate investment, production relocation, and supply-chain diversification. Still, it argues that the timing and scale warrant deeper enforcement scrutiny.

What carriers should watch

Carriers hauling import containers should expect tighter scrutiny at the border as CBP rolls out the AI screening tools. The system will flag shipments with routing anomalies, ownership mismatches, or production-capacity red flags. Carriers moving freight through free zones or bonded warehouses in the 40-plus flagged countries may face longer clearance times and more frequent exams.

If you haul for importers who source through Mexico, Vietnam, or India, ask where the goods were manufactured and whether the importer has documentation showing substantial transformation occurred in the country of origin listed on the bill of lading. CBP will be looking for that paper trail, and carriers caught in the middle of a transshipment case can face cargo holds and delayed payment while the importer sorts out the tariff dispute.