WASHINGTON — As U.S. President Donald Trump continues to implement tariffs on various imports, including a new 10% tariff on Chinese goods set to take effect next week, experts and industry insiders are also highlighting the need to address existing loopholes and workarounds that companies use to avoid these trade taxes.
One such practice that has helped companies from China and other countries evade tariffs is transshipment, where goods are transferred to a second country and then relabeled with a different country of origin to avoid being hit with tariffs.
Berwick Offray, a ribbon manufacturer based in Pennsylvania, has first-hand experience with this issue. Established in 1945, the company takes pride in its commitment to keeping its products “Made in the USA” and is one of the largest ribbon manufacturers in the world.
Recently, the company filed a lawsuit against a U.S. importer, TriMar Ribbon, for allegedly purchasing ribbons produced in China and then shipping them to the United States through India to avoid tariffs. This allows the imported ribbons from China to be sold at a lower price, undercutting the market for U.S. manufacturers.
In response to the allegations, U.S. Customs and Border Protection (CBP) has launched an investigation into the case, stating that TriMar did not properly declare the country of origin upon entry.
Daniel Pickard, an expert on international trade and an attorney at Buchanan Ingersoll & Rooney, which represents Berwick Offray, explained that there have been many cases of transshipment, particularly with products from China.
“We have assisted several clients in submitting allegations to CBP against importers of products that have been transshipped from China through third countries such as Thailand, India, and Canada,” Pickard told VOA. “Our clients are typically U.S. manufacturers who are facing unfair competition from Chinese imports that are evading tariffs.”
According to CBP data, there are currently 221 ongoing investigations into Chinese-made products suspected of transshipment and tariff evasion.
Closing loopholes and addressing tariff evasion has been a focus for the Trump administration. In early February, a blanket 10% tariff was imposed on all Chinese goods, and on March 4, an additional 10% tariff will be implemented.
To further prevent workarounds, including the use of transshipment, President Trump signed an executive order for reciprocal tariffs on trading partners. Additionally, U.S. lawmakers have introduced measures to address these loopholes, such as the Stopping Adversarial Tariff Evasion Act introduced by Senator Rick Scott, which aims to strengthen enforcement mechanisms to ensure compliance with customs and duties.
In December, Congresswoman Ashley Hinson introduced a bill to hold China accountable for tariff evasion through the establishment of a task force and reporting mechanisms for instances of financial crime.
Jayant Menon, a senior fellow at the ISEAS Yusof Ishak Institute in Singapore, stated that in the second Trump presidency, there will likely be increased efforts to monitor tariff evasion and ensure compliance.
“While it has become more challenging to determine the true country of origin in today’s globalized production and supply chains, increased scrutiny can help identify attempts to bypass tariffs,” Menon said. “If there is suspicion of tariff evasion, the entire country may face penalties through new tariffs.”
Pickard also believes that the new administration will launch more investigations into tariff evasion and take steps to counter discriminatory practices that harm U.S. companies.
“We anticipate that CBP will ramp up its enforcement efforts to combat widespread customs fraud involving Chinese products,” Pickard said.
Many stakeholders in the industry are hopeful that these issues will be addressed with criminal prosecution. The success of these efforts will not only benefit U.S. companies but also level the playing field for fair trade practices globally.
As the U.S. government takes steps to address tariff evasion and close loopholes, it is crucial for companies to comply with customs regulations and properly declare the country of origin for their products. This will not only ensure fair competition but also promote transparency and accountability in the global trade market.
In conclusion, the fight against tariff evasion and loopholes is essential for fair and sustainable trade practices. With the new administration’s increased efforts and the cooperation of companies, we can work towards a more equitable and prosperous global trade environment.
