Trump Administration Launches AI-Powered Crackdown on $75B Tariff Evasion Scheme Across 40+ Countries

Trump trade enforcers deploy AI in tariff evasion crackdown | Fortune

The Trump administration is developing an AI-powered "detective border" to crack down on trading partners suspected of enabling China to skirt tariffs on US imports. In a report released Thursday, the White House Office of Trade and Manufacturing Policy accused dozens of countries of being part of China's "shadow transshipment network," sorting them "according to the scale of China-linked trade, the depth of their economic integration with China, and the weak-link advantages that make them susceptible to rerouting activity." The values of these goods, described as flowing through third countries to evade levies on imports and other trade remedies, are based on analysis from two government and three private-sector sources. AI supply chain firm Exiger provided a mid-range estimate of $75 billion in illegally transshipped goods between February 2025 and February 2026, which corresponds a loss of tariff revenue between $19 billion and $34 billion. More than 40 countries are associated with elevated illegal transshipment risk, the report from White House trade adviser Peter Navarro's office said, and "China's biggest enablers range from Mexico and Canada on US land borders to the European Union, India, Japan, and South Korea." "This is basically a warning to the world -- don't try to cheat America," Navarro told Bloomberg Television on Thursday. In addition to China preserving access to the US market counter to US trade policy, "the spoils of illegal transshipment also enrich the transshipping countries themselves," the report said. "Local firms capture assembly fees, warehousing revenue, logistics margins, port charges, customs brokerage income, land rents, and export-processing-zone investment. Governments benefit from jobs, tax receipts, foreign investment, and trade growth." Other named countries include Indonesia, Thailand and Brazil and Malaysia. Still others are noted for comparative advantages that can be exploited, like the cost of labor, strategic port access, lax customs enforcement or free trade zones. The trend isn't new. When President Donald Trump imposed high tariffs on exports from China in his first term, many businesses responded by diversifying their supply chains, moving some manufacturing outside of China when possible. This so-called China +1 strategy spurred big investments in Vietnam, Cambodia and other countries, often by Chinese-owned factories. Upon returning to office, Trump unleashed a wave of country-specific duties with some of the highest rates aimed at US allies and major trading partners. Tens of billions of dollars in tariffs have hit compliant importers especially hard. "Detective Border" The White House's report acknowledges these "tariff differentials" can increase the incentive to illegally transship, but said tools designed to "detect, deter and prevent" tariff evasion are being deployed. Those tools include an AI-powered "detective border" that will scan shipment data against routing histories, confirm production capacity and ownership relationships and even analyze packaging patterns and X-ray imaging at ports to detect mismatches between what's declared and what's actually in a container. US trade enforcement authorities have for decades focused limited resources on cases with the biggest payout potential. Such cases are complex and often take years to build, meaning illicit goods often continue flowing into the US market at below fair-market prices, undermining US commerce. Illegal transshipment can be notoriously hard to detect and determining country of origin is complex, especially when imports are made from components manufactured in multiple countries. It's unclear how much of the supply chain shift outlined in the report reflects illicit activity rather than legitimate changes to global production and trade. "Effective enforcement therefore requires distinguishing legitimate manufacturing and substantial transformation from pass-through trade and origin shifting," the report said.

US flags dozens of trade partners as risks for aiding tariff evasion

The Trump administration flagged dozens of US trading partners Thursday as potential risks in aiding Chinese tariff evasion, vowing to tap artificial intelligence to help detect illegal practices in the future. Since returning to the White House last year, Trump has imposed sweeping tariffs on US trading partners, adding to existing duties that Chinese imports face. bys/mlm Washington: The Trump administration flagged dozens of US trading partners Thursday as potential risks in aiding Chinese tariff evasion, vowing to tap artificial intelligence to help detect illegal practices in the future. Among those named are the European Union and Taiwan, alongside US neighbors Mexico and Canada. Others include India, Japan, South Korea and Vietnam. The White House report takes aim at its longstanding concern surrounding "illegal transshipment," where goods could be sent through a third country that faces lower US tariffs to avoid paying higher levies imposed by President Donald Trump. Also read: PM Modi, Trump will work out Russian oil-related 100 per cent tariff issue, says US official "For years, the great transshipment scam has let Communist China launder its exports through more than 40 countries," White House trade advisor Peter Navarro told reporters. The US report released Thursday pointed to "more than 40 countries associated with elevated illegal transshipment risk." For some economies, transshipment risk is "embedded within broad legitimate trade flows," the report said. Others were found to be more integrated with China-linked supply chains, while a third group had advantages such as preferential US access that make them "attractive opportunistic targets" for rerouting. Navarro added that the White House is working closely with US Customs and Border Protection on an AI-enabled "detective border" to help assess whether a shipment involves transshipped goods. This system would tap information like shipment data, routing histories and other tools, the report said. Also read: India in 'regular contact' with US on trade deal, says Commerce Secretary Rajesh Agarwal Experts have long noted supply chain diversions from China since Trump's first presidency, when Washington and Beijing engaged in a tariffs war around 2018. Among those who benefited as businesses diversified their supply chains were countries like Vietnam, economists added. Since returning to the White House last year, Trump has imposed sweeping tariffs on US trading partners, adding to existing duties that Chinese imports face.