US companies who still have Chinese business partners are reportedly now finding ways to dodge Trump's tariffs by rerouting their shipments to other Southeast Asian countries. Billions of dollars worth of goods are reported being sent to countries like Vietnam, which are then sent to China masquerading as Vietnamese shipments.
Following Trump's increased tariffs, raised from 10 percent to 25 percent, on more than $200 billion worth of Chinese exports, US companies have been secretly evading the added levies through a practice known as transshipment.
With Trump set to add more tariff increases to around $300 billion worth of Chinese goods, more companies are now engaging in the practice to avoid paying hefty taxes.
According to reports citing sources close to the matter, US companies are sending packages meant for their Chinese partners to countries like Vietnam.
These packages briefly stop at a third port, where they are altered to look like they came from that particular country.
Data from Vietnam's Ministry of Industry and Trade have shown a sharp spike in the number of export to and from the country's ports in the last five months. These items range from electronic equipment, computers, machinery, components, and other equipment. Shipment's going to China from Vietnam and shipments from the US to Vietnam have increased. Similarly, Chinese shipments to Vietnam and shipments from Vietnam to the US have also increased.
Vietnam's trade ministry has condoned the practice which it describes as illegal trade fraud. The practice of fraudulently labeling exports apparently impacts the country's local industry, while also tarnishing the competitiveness and reputation of Vietnamese-made products.
Other Asian economies have also expressed their concerns over the proliferation of transshipment practices given the worsening situation in the trade dispute between China and the United States. In an attempt to curb the practice's Vietnam announced that it has instructed its provincial and municipal customs branches to ramp up their security measures.
These measures include more stringent inspection of documents such as a shipment's certificate of origin. The country's customs agency had admitted that it had caught several companies who were relabeling goods coming from China to say "Made in Vietnam" with the intent of sending them to countries such as the US and Europe.
Vietnam, as well as other Southeast Asian countries such as Thailand and Malaysia, had been the target of an effort by the Trump administration to curb transshipment practices last year.
According to the US Customs and Border Protection, it had already identified several companies who were rerouting goods to places such as Malaysia and the Philippines to avoid paying higher tariffs. The agency mentioned that they are continually pursuing these companies.
