‘Made in Malaysia': Sellers bombarded with ways to evade tariffs
[SEATTLE/CHICAGO] Online merchants are being inundated with suspicious offers to help avoid paying US tariffs on goods made in China.
Businesses selling everything from athletic apparel and furniture to home health care items have been approached by overseas logistics firms offering to fake the value of shipments to reduce tariffs or divert them through a country with lower levies than China, according to five people interviewed by Bloomberg.
The offers typically arrive by social media. 'We can provide the solution to help you save your cost', said one firm, which then offered to serve as the importer for an upcoming shipment and declare a lower value.
Unscrupulous logistics firms have long offered tariff-busting services, but online merchants say the brazen and unsolicited offers spiked after US President Donald Trump imposed steep tariffs on China earlier this month. They have persisted even as the president changes tack on an almost daily basis.
The online sellers interviewed say they declined to participate but worry that the shock and desperation unleashed by Trump's trade war could prompt their counterparts to try and cheat the system.
Aaron Rubin, who sells martial arts gear online, said he received an offer from a freight brokerage to import one of his shipments from China. The brokerage offered to submit paperwork to customs stating the shipment was worth US$10,000 even though the merchandise is worth about US$30,000, said Rubin, who shared screenshots of the correspondence with Bloomberg. The undervaluation would reduce the tariff bill by US$29,000.
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Rubin said he declined the offer and submitted a complaint about the firm to Customs. He's worried companies based in other countries with shell operations in the US will offer tariff-dodging services and be out of reach of US law enforcement.
'If people start saving US$10,000 in tariffs per container, it quickly adds up to billions,' said Rubin, who also founded the logistics software firm ShipHero. 'There are companies offering to do this as a service.'
One China-based freight broker offering the services said most clients are opting to route Chinese merchandise through Malaysia and say it was made there since the tariffs are 24 per cent compared with 145 per cent for China. But many are simply postponing shipments to see if Trump reduces tariffs, said the person, who spoke on condition of anonymity to avoid drawing attention to his firm.
US Customs and Border Protection charges tariffs based on paperwork submitted by importers and shipping companies. The forms describe the shipment's contents, where the items were made, their value and estimated tariffs. Deliberately undervaluing shipments or lying about their origins to reduce tariffs is illegal, and perpetrators can be subject to criminal and civil penalties.
Customs and Border Protection (CBP) declined to say if it was beefing up enforcement of these laws given the steep rise in tariffs. The agency relies largely on complaints submitted through an online portal.
'CBP does not publicly disclose investigative methods, sources of information, or any other information that may jeopardise the safety of witnesses or otherwise affect ongoing investigations,' agency spokesperson Jeffrey Quinones said.
William George, research director at the customs data firm Import Genius, said the steep increase in tariffs could compel some businesses to recalculate the risks versus rewards of breaking the law.
'Businesses are looking at existential crises and could be weighing the risk of paying some fines over losing their livelihoods,' he said. BLOOMBERG
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