Over the years since President Trump imposed tariffs on Chinese goods, China and its companies found many ways to evade those 25% tariffs. What they do is to create the products in Mainland China and set up a factory warehouse in Thailand, Taiwan, Malaysia, Cambodia or India. They then change the papers showing the country of origin as one of those places they set up the operations and ship them to the United States. Sometimes they even ship them through Mexico or Canada.
Sometimes, these evasion tactics are caught when someone in the company reports it to our agencies or becomes a whistleblower and files a case through counsel. For the most part, thats how we know this is going on and saves the Chinese companies millions of dollars because those other countries don’t have the tariffs on them. Clear fraud.
On december 31, the New York Times highlighted the issue explaining that Chinese products are merely taking a longer trip around the world to avoid tariffs. The article also points out that China’s exports around the world have gone way up. Interestingly in China certain companies are actually advertising services to help Chinese companies to find factory space in Mexico and help recruiting workers there.
The solutions are likely being considered by future President Trumps’ advisors but the countries where the Chinese companies are now being seated should be required to report operations where transshipping and fraudulent reporting of the country of origin is happening. In addition, efforts are being started to prevent products to be shipped into Mexico and replaced with paperwork saying they were produced there.
Jeff Newman JD MBA, represents whistleblowers nationwide relating to customs and tariff fraud concerning imported Chinese goods as well as corporate whistleblowers in major claims under the False Claims Act (Qui Tam), and SEC, CFTC and FINCEN whistleblower programs. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217
