Dodging tariffs in the U.S.: a case study of a car parts company seeking to clamp down on customs fraud
The proposals — which are circulating in emails, as well as in videos on TikTok and other platforms — reflect a new flood of fraudulent activity, according to company executives and government officials. As U.S. tariffs on foreign products have increased sharply in recent months, so have the incentives for companies to find ways around them.
The Chinese firms claim their methods are valid solutions. For a fee, they find ways to bring products to the United States with much lower tariffs. Some experts think these practices are ways of customs fraud. The companies may be dodging tariffs by altering the information about the shipments that is given to the U.S. government to qualify for a lower tariff rate. Or they may move the goods to another country that is subject to a lower tariff before shipping them to the United States, a technique known as transshipment.
“If nothing is done, those willing to cheat are going to continue to win the day here,” said David Rashid, the executive chairman of Plews, a car parts company that has appealed to the government to crack down on unfair trading practices by its competitors.
Uncertainty Among Factory Owners in the U.S. After the Heavy Imports Tax Cuts and the Decline of the First Year Customs Enforcement Regulation
Goods from China faced a 245% tax if they came to the U.S. last month. Then, the U.S. and China announced a 90-day pause on most of those tariffs, unleashing a surge in pent-up exports from China to the U.S. that has snarled logistics lines and jacked up freight prices as shippers frantically divert capacity back to China.
But there is still huge uncertainty among factory owners in China, who tell NPR orders are down overall as spooked American retailers hedge over whether tariffs will come roaring back after the pause.
Tian, a sales manager in Dongguan, where many Chinese factories are located, says exports to the U.S. make up half of her company’s business. They can make fans and heater in just a few weeks or less, which is ideal for American importers who need to place orders before the fall. But this year, overall sales volumes are low.
Some American retailers still have not made a decision about buying from us. They have not responded to our emails. Maybe they are still waiting and watching,” says Ivy Lee, a sales manager at a Chinese homeware manufacturer that sold to retailers like Walmart before the tariffs hit.
“These are everyday consumables and demand will return eventually,” Lee said. If they need them, they will buy.” As for the broader uncertainty, she adds, “I try not to worry too much. Policy changes are out of our hands.”
“For now, everyone is trying to get as much of their shipments to the U.S. completed as possible within these few months,” says Tian Xin, a freight forwarder who arranges logistics for large freight and also coordinates paperwork for customs clearance for Chinese exports.
Jenny Tian works in freight forwarding in the southern Chinese city of Shenzhen and says she has been fielding calls for huge product orders. Shipping is the problem.
“We might soon be facing what we call ‘container rollovers,’ where even if you have already paid for a container spot on the ship, your container might not get loaded and is pushed onto the next available vessel,” Tian says. For her company, the cost of shipping to the West Coast of the U.S. has increased by $1,500 per container.
Many ships servicing the routes between the West Coast and China have been diverted to other routes, creating delays as exporters in China wait for ships to return to ports in China.
“You need those vessels at minimum to come back [to China], and you create disturbances, and you don’t have enough empty containers, et cetera,” says Eric Martin-Neuville, an executive vice president in Singapore for GEODIS, the French logistics company.
The regional director at the home appliances factory in Guangzhou says that the company is holding off selling to the U.S. market because of concerns over volatility. Home appliances include gas boilers and heat pumps.
China’s expansion of exports to Southeast Asia and Europe slowed by the U.S.-Brazil trade surplus in April
The value of China’s overall exports increased in April when compared to the previous year, according to data from China’s national statistics bureau.
Trade with the U.S had dropped, but exports to Southeast Asia and Europe surged by levels high enough to make up for the lost business — though it is possible some of those exports still ended up in the U.S.
