Trump trade enforcers deploy AI in tariff evasion crackdown

AI-powered border enforcement

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, according to Fortune.

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 to 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, and free trade zones.

The report acknowledged that “tariff differentials” can increase the incentive to illegally transship, and said tools designed to “detect, deter and prevent” tariff evasion are being deployed. The AI-powered border “detective” will scan shipment data, confirm production capacity, analyze packaging patterns and X-ray imaging, according to Fortune.

Skepticism over effectiveness

The Guardian offered a more skeptical take, headlining its piece with a question about whether the US is “too chicken” to confront China on trade. It reported that China offered a truce in the trade war last October after threatening to deprive the US of rare-earth magnets, and that imports from China fell by 40% in the year to June compared with 2024. However, while China’s share of US imports fell, its share of total value added in US imports did not, according to the report.

The Guardian reported that Navarro was furious about Chinese motors bolted on to recliners imported from Vietnam, citing a Commerce Department analysis that concluded $67bn of goods from China were transhipped through Mexico, India and Vietnam in 2025. The White House unveiled the AI-powered border “detective” to scan bills of lading and shipping manifests.

The Guardian noted that manufacturing employment remains roughly the same as when Trump first came into office, and that the US import bill is running higher than in 2024. China’s exports have kept growing despite US efforts, with its share of global manufacturing exports rising from 3% to 20% since 1995 and accounting for over half the global exports of hundreds of manufacturing products. China’s current account surplus is equal to perhaps 5% of its GDP.

Policy debate

Gene Frieda from the London School of Economics told The Guardian: “The barrier to progress is not policy design; it is policy preference.” Brad Setser of the Council on Foreign Relations said history suggests currency adjustment would drive realignment. The Guardian noted that the Plaza accord in the 1980s weakened the dollar and helped reduce the US trade deficit with Japan, and China’s surplus contracted as the yuan appreciated after the global financial crisis, and rose as the yuan slid since 2023.

The article also mentioned that Section 301 of the Trade Act can impose tariffs on countries that undervalue currency, and that Europe could impose tariffs sanctioned by the WTO to stop Chinese imports.

Outlook

It remains unclear how much of the supply chain shift outlined in the report reflects illicit activity rather than legitimate changes to global production and trade, according to Fortune. Effective enforcement requires distinguishing legitimate manufacturing from pass-through trade, the outlet noted. The trend isn’t new; Trump imposed high tariffs in his first term, prompting businesses to diversify supply chains under a “China +1” strategy that spurred investments in Vietnam, Cambodia and other countries. The report acknowledged that US enforcement has focused on big payout cases, often taking years to build, and that it’s unclear how effective the new AI tools will be in practice.