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Washington, D.C., June 1, 2025 – Former US President Donald Trump’s trade policy has been characterized by high tariffs. Although the high tariffs he imposed on Chinese goods have been called a ‘lightning strike,’ it seems that even in the midst of that strike, ‘foolish tricks’ are emerging.1 Various importers and shipping companies are now coming up with new strategies to evade tariffs, most of which are being used by Chinese companies. Such sensational information has emerged in a New York Times investigation.
Whenever Trump announces new tariff increases, some American importers are receiving mysterious emails and messages. These messages are directly offering to avoid tariffs. For example, one email reads, “We can avoid high tariffs on China, as we have done many times in the past.” Another message assures, "Beat US tariffs. Transport goods worry-free." Even promises to reduce tariffs to 10 percent are being made. These offers have flooded emails, TikTok videos and other online platforms.
Executives of American companies and government officials say that the widespread spread of such offers online seems to indicate the beginning of a new wave of tariff fraud. As American tariffs on foreign goods have increased in the past few months, the temptations offered to companies have also increased manifold. Chinese companies that engage in these tariff evasion are advertising their 'services' as legitimate solutions. They show the way to export goods to America at much lower tariffs in exchange for a certain amount of money.
Experts say that this practice of tariff evasion is actually a different method of tariff fraud. Typically, companies evade duties by changing the invoice information they provide to the American government. In addition, several other techniques have become popular:
1. Underpricing: One strategy is to display a lower price on paper than the actual price of a product. This reduces the amount of duty payable on the product.
2. Misclassification of the product: Importers can inform the US government that the product being imported (e.g., a shirt) is made of a material that is subject to lower tariffs. In other words, the product is placed in the wrong category and the tariff rate is reduced.
3. Transshipment or sending the product to a third country: This is one of the most well-known and profitable strategies. In this method, the product is first sent to a low-tariff country (e.g., Vietnam, Malaysia, or Thailand) before reaching the US. From there, the product is then sent to the US to take advantage of the lower tariffs. This strategy is considered quite profitable this year.
The US government determines the tariff based on a specific product, its displayed dollar value, and the country of manufacture. These tax evasion tactics are implemented by changing this information. Even though the Trump administration recently imposed a minimum tariff of 145 percent on Chinese goods, attempts are being made to avoid it by showing these loopholes. In this situation, the effectiveness of Trump's high tariff policy has been questioned, because despite his 'thunderclap', the 'loopholes' of tax evasion are working just fine.
