White House says tariff evasion costs it up to $26 billion a year as Brazil opens a retaliation process

The White House put a dollar figure on the revenue it says is lost when goods evade its tariffs. Peter Navarro, the trade adviser who has driven the administration's tariff programme, told reporters that China is routing exports through more than 40 countries and that the practice costs the government between $19 billion and $26 billion a year in forgone revenue, Euronews reported.

The underlying report from the Office of Trade and Manufacturing Policy relies on an estimate from the supply-chain analytics firm Exiger that roughly $75 billion of goods moved through third countries between February 2025 and February 2026, with the implied revenue loss ranging as high as $34 billion depending on the assumptions used, according to Fortune. The report named Mexico, Canada, Indonesia, Thailand, Brazil and Malaysia among the largest routes used, and described plans for US Customs and Border Protection to deploy automated detection systems against re-labelled cargo.

Brazil, one of the countries named, responded differently. Al Jazeera reported that Brazil's government has begun exploring retaliatory options against the latest American tariffs without deciding whether to use them. Officials have opened proceedings under the country's economic reciprocity law, which allows the suspension of trade concessions, investment terms and intellectual-property protections, without yet imposing immediate counter-tariffs that would raise costs for Brazilian importers.

Two mechanisms are at work here. Tariffs make rerouting more profitable, so trade shifts toward whatever legal or semi-legal route costs the least, forcing enforcement to expand into forensic customs work across dozens of jurisdictions. Meanwhile, targeted governments increasingly respond with tools other than tariffs, because they have found that taxing their own importers raises domestic prices first.