Dodging tariffs to thwart customs fraud in the U.S.: a warning from the Plews automotive parts company
The Trump administration said that it would focus on fighting trade fraud. The administration is also trying to persuade other countries to step up their own enforcement efforts, including in trade talks with Vietnam, Mexico and Malaysia. But many American companies say the scale of illicit activity now far outweighs the ability of these governments to thwart it.
The Chinese firms advertising these services describe their methods as valid solutions. They find ways to bring products to the us with lower tariffs for a fee. But experts say these practices are methods 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. transshipment means moving the goods to a country that is subject to a lower tariffs in order to get them to the United States.
“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.
American Factory Owners are Waiting for the New Tariffs: Implications for Container Rollovers and the Supply Chain in the U.S
Goods from China faced a steep tax if they were to enter the U.S. The 90-day pause on most of those tariffs, announced by the U.S. and China, has unleashed a surge in exports of goods from China to the US that has snarled Logistics lines and jacked up freight prices.
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.
Half of her company’s business comes from exports to the US, which is where many Chinese factories are located. If American importers were to place orders for fans and heaters in a few weeks, that would be ready for the fall. Overall sales volumes are low this year.
“Some [American retailers] still have not made a decision [about whether to buy from us]. They didn’t respond to our emails. Ivy Lee, a sales manager at a Chinese homeware manufacturer that sold products to retailers like Walmart before the tariffs hit, thinks they are still waiting and watching.
These are consumables and Lee believes demand will return eventually. If they need them, they will buy.” She tries to not worry too much about the broader uncertainty. Policy changes are out of our hands.”
Everyone is trying to get as many of their shipments to the U.S. done in the next few months according to a freight forwarder who works with 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. But the problem is shipping.
“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.
Eric Martin-Neuville, an executive vice president in Singapore for France’s GEODIS, says that you need vessels at a minimum to return to China.
Chris Que is the regional director of a home appliances factory in the southern city of Guangzhou, which is currently not selling to the U.S. market. The company makes gas boilers and heat pumps.
Economic rebound in the April U.S. tariff crisis: a data-driven increase in China’s trade with the United States, Southeast Asia, and Europe
Data from China’s national statistics bureau shows that when U.S. tariffs reached their peak, the value of overall exports actually jumped by 8.1% in April when compared to the previous year, beating economists’ predictions.
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.