President Donald Trump’s tariff dodging fears are actualizing–and it could be costing the administration huge chunks of change.
Goldman Sachs warned that export data indicates increased rates of transshipments from China to the U.S. through third-party countries—a similar pattern observed during the 2018 trade war. The tariff evasion taking place today could impact more than $200 billion in U.S. imports, costing the U.S. $40 billion in tariff revenue if efforts to curb the sidestepping aren’t mitigated, bank analysts Joseph Briggs and Megan Peters said in a report.
Earlier this month, Torsten Sløk, chief economist at Apollo Global Management, estimated the Trump administration’s tariff efforts will bring in a “very significant” $350 billion in annual revenue.
As Trump imposes sweeping tariffs on countries—most recently a 100% tax on imported branded pharmaceuticals going into effect on Oct. 1—some companies have tried their best to take action to evade the levies. Many have warned that they face an impact worth billions of dollars each year. Goldman highlights the practice of transshipping, or reorganizing a supply chain to ship products from a country with lower imposed levies. Tariff dodging could also look like companies underreporting the value of goods or mislabeling products as similar goods that aren’t subject to as high of taxes.
