Tens of thousands of 
logistics companies are helping manufacturers minimize the impact of US tariffs through strategies that include undervaluing shipments or disguising their origins.
These entities offer "double clearance and tax inclusive" services, and have exploded in numbers since Trump’s trade war on China in his first term. For bargain rates advertised on Chinese social media, they oversee customs compliance on both sides of the trade, sometimes working through related companies that act as importers of record. One of the tricks is double invoicing, which can include understating the cost of a product on one invoice, while putting the rest on another for a service not subject to tariffs, like "marketing."
"It's an open secret in our industry.”
Logistics players have helped companies shrug off Trump's trade war so far. Before Trump embarked on tariff hikes in Feb, a Shenzhen lighting manufacturer was paying logistics companies roughly 10 yuan per kg to handle the lighting products sold in the US. As of this week, the total cost of seaborne double clearance services had only risen by 1 or 2 yuan (14 to 27 cents). While the costs might increase further, they are not expected to climb anywhere near as much as Trump's total tariffs on China (145% currently).
Evasive maneuvers like those employed by the logistics companies help some exporters stay competitive.
Enforcing tariff payment has not been easy. The tariffs Trump imposed on China during his first term led to evasion worth up to $110B to $130B in 2023, with underreporting and mislabeling each contributing $40B and rerouting accounting for $30B to $50B.
Logistics providers have mushroomed alongside their main clientele: the myriad merchants that sell everything from lamps and home appliances to T-shirts and trinkets online. China's cross-border e-commerce trade has boomed in recent years, reaching a new high of 2.63 trillion yuan last year, up 10.8% from a year earlier and accounting for 6% of China's overall trade value.
The number of cross-border e-commerce logistics companies reached over 167,400 as of Oct 2024.
"It's essentially a volumes game. The more orders they can get, the stronger bargaining power they have in negotiating with shippers and cargo airlines.”
Logistics providers compete by giving buyers quotes that are as low as possible. On RedNote (Xiaohongshu), a search for "double clearance tax inclusive" turns up numerous ads offering cheap delivery of refrigerators, air conditioners and other household items to the US West Coast. Some offer rates of as little as 5.7 yuan (~79 cents) per kg, although prices vary. Freightos, a global freight booking and payment platform, estimates ocean shipping costs at around $2 to $4 per kg.
There will be even more demand for the companies' services after the de minimis rule — the duty-free treatment for shipments from China valued at up to $800 — is terminated.
While there is nothing illegal about trimming costs by shipping in bulk, some logistics providers cross into murkier waters.
To handle customs clearance, logistics players may operate fleets of shell companies that are constantly changing to act as importers of record, which then use doctored or fabricated invoices and false customs entry summaries to reduce the tariffs owed.
Most customs fraud involves undervaluation, which can also occur without logistics companies if sellers and buyers collude. Other approaches include transshipment and mislabeling the country of origin — an avenue Trump has sought to restrict by targeting countries like Cambodia and Vietnam with high tariffs although he has paused them — and failure to declare anti-dumping or countervailing duties.
The merchants are most likely aware that the logistics firms are cheating on customs duties. The prices they're being charged are probably way too low for the transactions to be legitimate.
1/n
asia.nikkei.com/Spotlight/Poli
logistics companies are helping manufacturers minimize the impact of US tariffs through strategies that include undervaluing shipments or disguising their origins.
These entities offer "double clearance and tax inclusive" services, and have exploded in numbers since Trump’s trade war on China in his first term. For bargain rates advertised on Chinese social media, they oversee customs compliance on both sides of the trade, sometimes working through related companies that act as importers of record. One of the tricks is double invoicing, which can include understating the cost of a product on one invoice, while putting the rest on another for a service not subject to tariffs, like "marketing."
"It's an open secret in our industry.”
Logistics players have helped companies shrug off Trump's trade war so far. Before Trump embarked on tariff hikes in Feb, a Shenzhen lighting manufacturer was paying logistics companies roughly 10 yuan per kg to handle the lighting products sold in the US. As of this week, the total cost of seaborne double clearance services had only risen by 1 or 2 yuan (14 to 27 cents). While the costs might increase further, they are not expected to climb anywhere near as much as Trump's total tariffs on China (145% currently).
Evasive maneuvers like those employed by the logistics companies help some exporters stay competitive.
Enforcing tariff payment has not been easy. The tariffs Trump imposed on China during his first term led to evasion worth up to $110B to $130B in 2023, with underreporting and mislabeling each contributing $40B and rerouting accounting for $30B to $50B.
Logistics providers have mushroomed alongside their main clientele: the myriad merchants that sell everything from lamps and home appliances to T-shirts and trinkets online. China's cross-border e-commerce trade has boomed in recent years, reaching a new high of 2.63 trillion yuan last year, up 10.8% from a year earlier and accounting for 6% of China's overall trade value.
The number of cross-border e-commerce logistics companies reached over 167,400 as of Oct 2024.
"It's essentially a volumes game. The more orders they can get, the stronger bargaining power they have in negotiating with shippers and cargo airlines.”
Logistics providers compete by giving buyers quotes that are as low as possible. On RedNote (Xiaohongshu), a search for "double clearance tax inclusive" turns up numerous ads offering cheap delivery of refrigerators, air conditioners and other household items to the US West Coast. Some offer rates of as little as 5.7 yuan (~79 cents) per kg, although prices vary. Freightos, a global freight booking and payment platform, estimates ocean shipping costs at around $2 to $4 per kg.
There will be even more demand for the companies' services after the de minimis rule — the duty-free treatment for shipments from China valued at up to $800 — is terminated.
While there is nothing illegal about trimming costs by shipping in bulk, some logistics providers cross into murkier waters.
To handle customs clearance, logistics players may operate fleets of shell companies that are constantly changing to act as importers of record, which then use doctored or fabricated invoices and false customs entry summaries to reduce the tariffs owed.
Most customs fraud involves undervaluation, which can also occur without logistics companies if sellers and buyers collude. Other approaches include transshipment and mislabeling the country of origin — an avenue Trump has sought to restrict by targeting countries like Cambodia and Vietnam with high tariffs although he has paused them — and failure to declare anti-dumping or countervailing duties.
The merchants are most likely aware that the logistics firms are cheating on customs duties. The prices they're being charged are probably way too low for the transactions to be legitimate.
1/n
asia.nikkei.com/Spotlight/Poli
