Chinese exporters are routing goods through neighboring countries to disguise their origins and evade tariffs of up to 145% imposed by US President Donald Trump, according to traders, logistics agents and customs officials.
According to the Financial Times, many advertisements about “origin laundering” to avoid US taxes have appeared on Chinese social networks.
Posts encourage shipping to other Asian countries like Malaysia to obtain new certificates of origin, allowing Chinese goods to enter the US with lower tariffs.
This reflects concerns among Chinese exporters about losing the US market due to high tariffs. However, under US trade rules, goods must undergo a “substantial transformation” to be recognized as a new country of origin.
Officials across Asia say more companies are bypassing tariffs
Last month, South Korean customs discovered $21 million worth of counterfeit “Made in Korea” goods, mostly from China, destined for the U.S. Vietnam and Thailand have stepped up checks on the origin of goods to prevent fraud.
Several logistics companies told the Financial Times that they ship goods through Port Klang in Malaysia, changing labels and paperwork so that the Chinese goods are labeled as Malaysian before entering the US. One agent admitted that this is subject to quantity controls, and that Malaysian customs is “not too strict”.
Some exporters are mixing expensive items with cheaper items in one shipment.
Exporters are using two main tactics to avoid US tariffs: “origin laundering” and mixing expensive goods with cheap ones to declare an average price, an adviser said.
These measures have caused concern among US retailers. A senior executive at one of the 10 largest retailers on Amazon said they had received goods with altered origin documents, potentially putting them at risk of being confiscated.
This person refused the Chinese supplier's offer to handle import procedures and pay taxes at factory prices, fearing high risks.