{"id":14477,"date":"2025-05-06T06:32:56","date_gmt":"2025-05-06T06:32:56","guid":{"rendered":"https:\/\/infundpros.com\/?p=14477"},"modified":"2025-05-06T06:32:57","modified_gmt":"2025-05-06T06:32:57","slug":"chinese-exporters-undervalue-cargo-to-skirt-trump-tariffs","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=14477","title":{"rendered":"Chinese exporters undervalue cargo to skirt Trump tariffs"},"content":{"rendered":"
\n

Chinese manufacturers are attempting to avoid the Trump administration\u2019s tariffs by fraudulently undervaluing cargo sent to the US, exploiting a system that American authorities have struggled to police.<\/p>\n

The Financial Times reviewed offers by Chinese chemicals and packaging suppliers to send goods to small US companies with \u201cdelivery duties paid\u201d \u2014 a process known as DDP that allows the exporter to cover tariffs.<\/p>\n

The suppliers said the process would enable them to drastically reduce the cost of tariffs because they would deliberately undervalue the goods sent, or alter their descriptions to lessen the duties owed.<\/p>\n

\u201cWe see more instances of factories in China offering to pay the customs duties for companies, and then sell them the merchandise in the US at prices below what the duties should be,\u201d said Ryan Petersen, chief executive of logistics platform Flexport.\u00a0<\/p>\n

The practice threatens to undermine efforts to incentivise US companies to source products from domestic manufacturers, one of the aims of President Donald Trump\u2019s tariffs. It might also temporarily insulate American consumers from some price increases to everyday goods.<\/p>\n

\u201cThis is nothing but a tariff dodge,\u201d said Dan Harris, a US lawyer who works with companies that source goods from China. While federal prosecutors would go after US companies colluding in the practice, \u201cthere is not much that [they] can do\u201d to pursue Chinese counterparts, Harris added.<\/p>\n

Aaron Rubin, who owns logistics company ShipHero and a martial arts equipment distributor, 93 Brand, said his Chinese suppliers \u201chave offered to do DDP and pay [the additional tariffs]. They said \u2018we are going to cover 100 per cent of the duties\u2019\u2009.\u2009.\u2009.\u2009I would never get a bill.\u201d<\/p>\n

Businesses such as Rubin\u2019s, which have reported such approaches to US Customs and Border Protection, are concerned that competitors are accepting the deals, leaving law-abiding companies at a disadvantage.<\/p>\n

The practice \u201cshuts down my ecommerce business\u201d, said Rubin. \u201cI can\u2019t afford to pay a 175 per cent tariff if my competition isn\u2019t going to pay it; no one is going to buy my [more expensive] goods.\u201d<\/p>\n

The owner of a California-based food manufacturer, who asked not to be named, said one Chinese supplier \u201coffered to change the cogs on invoices to help me evade tariffs\u201d soon after Trump rolled out the increased duties.<\/p>\n

\u201cMy option is to lay off my team or join in the fraud,\u201d the owner said.<\/p>\n

Some of the Chinese companies who approached US businesses offered to register as a \u201cforeign importer of record\u201d, which would make them legally responsible for paying any duties owed.<\/p>\n

The US is unusual among major economies for allowing foreign companies without a presence in the country to post a small bond to register as importers, making it hard for authorities to enforce large penalties.<\/p>\n

A government report in 2008 found that the Department of Justice rarely pursued cases of fraud by \u201cforeign importers of record\u201d, because \u201cit is unlikely that collection actions based upon delinquent duties can be successfully brought in [a] foreign court\u201d.<\/p>\n

The problem was also highlighted in conservative think-tank Heritage Foundation\u2019s Project 2025 report, which has functioned as a blueprint for some of the Trump administration\u2019s policymaking.<\/p>\n

The paper suggested that the US government \u201ceither require foreign importers of record (IORs) to make cash deposits far in excess of established duty rates at the time of entry\u201d or \u201crequire IORs to register sufficient US assets to ensure timely payment of duties\u201d.<\/p>\n

Callie Milford, who runs soap and beauty products company No Tox Life, has also been approached by suppliers offering to dodge tariffs. <\/p>\n

Her Texas business manufactures in the US but sources some packaging from China.\u00a0After the Trump administration first imposed higher tariffs on Chinese goods in February, she asked her long-standing suppliers how much her costs would increase as a result.<\/p>\n

The majority of responses, which were shown to the FT, were: \u201cYour price won\u2019t really go up, because we\u2019re going to use DPP shipping and essentially under-declare the shipment,\u201d Milford said.<\/p>\n

<\/source><\/picture>
Callie Milford, co-founder of No Tox Life, says some of her suppliers have offered to dodge tariffs<\/span> \u00a9 Handout<\/span><\/figcaption><\/figure>\n

They added that due to a recent jump in transport costs, the shipping price would \u201cgo up a little bit, but the amount that it was going to go up was nothing compared to the tariffs\u201d, Milford added.\u00a0<\/p>\n

Louisiana Senator Bill Cassidy, who has long campaigned for customs reform, said the government needed to \u201cgive CBP the tools to properly police shipments coming from China\u201d.<\/p>\n

Cassidy said he was working on a bill \u201cto increase visibility in our international supply chains\u201d and planned to introduce it in this session of Congress.<\/p>\n

In a statement, the CBP said it \u201cenforces tariffs through a combination of legal authority, advanced systems, and operational procedures\u201d and that \u201cas a result of recent presidential actions, enforcement will include the most severe penalties permitted by law\u201d.<\/p>\n

Chinese logistics managers told Nikkei Asia last month they were creating shell companies to evade tariffs. The FT also reported that Chinese exporters were attempting to avoid tariffs by shipping goods via third countries.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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