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The Star
24-04-2025
- Business
- The Star
‘Made in Malaysia': Sellers bombarded with ways to evade tariffs
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 President Donald Trump imposed steep tariffs on China earlier this month. They've 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 $10,000 even though the merchandise is worth about $30,000, said Rubin, who shared screenshots of the correspondence with Bloomberg. The undervaluation would reduce the tariff bill by $29,000. 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 $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% compared with 145% 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 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 jeopardize the safety of witnesses or otherwise affect ongoing investigations,' agency spokesman Jeffrey Quinones said in an emailed statement. 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
Business Times
24-04-2025
- Business
- Business Times
‘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. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up 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
Yahoo
23-04-2025
- Business
- Yahoo
E-commerce margins set to rise as trade war reshapes market: ShipHero CEO
The ongoing trade war between the United States and China is reshaping the e-commerce landscape, potentially leading to higher margins and improved profitability for U.S. online sellers, according to Aaron Rubin, CEO of warehouse management system provider ShipHero. Rubin posted a video to X on Tuesday giving his thoughts on what the future holds for e-commerce. ShipHero, a leading player in the e-commerce fulfillment space, offers integrated solutions for online stores, including popular platforms like Shopify and Amazon. The company's software streamlines order processing, picking, packing and shipping, providing real-time insights to help businesses make informed decisions. Rubin argued that while the immediate effects of tariffs and trade restrictions may be challenging for many U.S. e-commerce businesses, the long-term outcome could be favorable for those who can weather the storm. 'Many U.S. e-commerce businesses will go bankrupt because of the tariffs, and it's very frustrating the way they were implemented, but the net result is going to be higher margins and better profitability for U.S. e-commerce sellers over time,' Rubin said in the video. Central to Rubin's thesis is the elimination of Section 321, a provision that allowed for tariff-free import of goods valued under $800. This loophole, set to end on May 1, has been extensively exploited by Chinese sellers, who have dominated a significant portion of the U.S. e-commerce market, particularly on platforms like Amazon. According to Rubin, Chinese sellers have been able to flood the U.S. market with goods by breaking up shipments and often undervaluing their products to stay below the $800 threshold. This practice has given them a substantial competitive advantage over U.S. sellers who couldn't utilize the same tactics. The CEO estimates that a third of all Amazon merchandise comes from Chinese sellers, representing a significant portion of the e-commerce giant's inventory. The removal of this provision is expected to level the playing field, forcing Chinese sellers to compete under the same rules as their U.S. counterparts. However, Rubin points out that other avenues for unfair competition still need to be addressed. One such issue is the use of nonresident importer (NRI) status, which allows Chinese sellers to import goods without establishing a U.S. entity. This arrangement makes it easier for them to misrepresent the value of their imports and face fewer consequences if caught. Rubin suggests that stricter regulations and larger bonds for non-U.S. companies could help combat this problem. Another concern is the ease with which Chinese sellers can create shell companies in the U.S. If one entity is shut down for fraudulent practices, sellers can quickly establish a new one, whereas U.S. companies face more significant legal and reputational risks for similar actions. While these changes are likely to benefit U.S. e-commerce sellers in the long run, Rubin acknowledges that there will be short-term challenges. U.S. consumers may face higher prices and potential shortages in certain product categories as the market adjusts. 'We will see shortages and stockouts in places that we probably don't expect because there are clusters that are only served by Chinese sellers,' Rubin explained. Despite these hurdles, he remains optimistic about the future for U.S. e-commerce brands. He advises companies to focus on survival in the short term, emphasizing that those that can endure the transition will likely enjoy greater pricing power and profitability in the future. The post E-commerce margins set to rise as trade war reshapes market: ShipHero CEO appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
28-02-2025
- Business
- Yahoo
Looming de minimis restrictions put importers at a crossroads
This story was originally published on Supply Chain Dive. To receive daily news and insights, subscribe to our free daily Supply Chain Dive newsletter. Without de minimis treatment for imports from key U.S. trading partners, companies are now figuring out the best path forward for their supply chains. During a webinar last week, cross-border logistics experts said there are several paths businesses can take depending on their particular needs. However, a deluge of trade policy changes and uncertainty about future regulations are making those decisions harder. "It's just fatigue around the conversation, because they just want to know what the rules are going to be," Maggie Barnett, CEO of LVK Logistics, said. The de minimis exemption is often leveraged by cross-border e-commerce shippers to ship sub-$800 products into the U.S. without having to pay additional duties, limiting shipping costs in the process. The Trump administration plans to ax the exemption for products from China permanently once "adequate systems are in place' to quickly process and collect related tariff revenue. De minimis eligibility is also slated to be cut for goods from Canada and Mexico under executive orders slated to take effect next week. Using a U.S.-based 3PL is a strong option at the current juncture, according to Barnett, since she expects the de minimis exemption will receive further scrutiny even when it no longer applies to shipments from China. If a company aggressively shifts their sourcing to Bangladesh, Vietnam or another country, that could just leave them vulnerable to future U.S. trade actions, Barnett said. "Why would they just close this for China?" Barnett said, referring to de minimis treatment. "If the mandate is to reduce fentanyl, increase revenues into the U.S. and increase U.S. jobs, why just stop at China?" Companies need to find a long-term fulfillment solution with less exposure to rapidly changing trade policies, as frequent supply chain shifts can be expensive for brands, Barnett added. Companies with 20,000 to 25,000 SKUs could incur expenses up to $100,000 just to move their inventory to a new 3PL, she said. "That's where the idea of coming back to a U.S. 3PL is basically the best option at this point," Barnett said. Aaron Rubin, CEO of warehouse management system provider ShipHero, recommended smaller brands lean on U.S.-centric operations and domestic 3PLs, while advising larger brands to partner with a capable customs broker and lawyer to minimize tariff costs. Higher brokerage fees are also a concern as importers navigate new trade rules. In response, Rubin said some companies are trying to clear as many products as possible in one customs entry, grouping them by both the client they're serving and the applicable Harmonized System (HS) code. "If you can do a formal entry and every line is going to be separate, you're going to run into a lot of brokerage fees," Rubin said. "And most people are using this to save, like, a couple dollars per package." Companies should weigh labor costs as well in determining their de minimis response. Mexico is a key location for fulfillment into the U.S., and eliminating the exemption won't entirely erase that, according to Rubin. That's because brands can still leverage Mexico's lower labor costs for more hands-on processes. This includes fulfilling shipments that are kitted — combining multiple items into a single package — or have more complex manufacturing needs. Experts also floated the use of Type 11 entry as an alternative for de minimis-reliant importers, although that requires more information during the customs process. Type 11 entry is a simplified procedure where goods can be cleared through customs without a bond as long as the shipment's value doesn't exceed $2,500, or $250 for China-based goods covered by Section 301 tariffs, Portless CEO Izzy Rosenzweig said in a LinkedIn post. Portless has been testing Entry Type 11 "with great results," according to Rosenzweig. Importers may adjust more quickly to Type 11 entries in the future after using the process during the initial ban on de minimis shipping from China earlier this month, said Scott Sangster, general manager of global logistics service providers at Descartes Systems Group, in an interview with Supply Chain Dive. Companies are "getting better at comparing the information that they're going to need to continue to comply with different types of filings," he added. "The Type 11 informal entry was the most natural entry for people to move to," Sangster said. Editor's note: This story was first published in our Logistics Weekly newsletter. Sign up here. Recommended Reading De minimis exemption temporarily returns for products from China
