exporters are stepping up efforts to avoid US tariffs by shipping their goods via third countries to conceal their true origin.
social media platforms are awash with adverts offering “place-of-origin washing”, while an inflow of goods from China has raised alarm in neighboring countries wary of becoming staging posts for trade actually destined for the US. The growing use of the tactic underlines exporters’ fears that new tariffs of up to 145% on Chinese goods will deprive them of access to one of their most important markets.
“The tariff is too high. [But] we can sell the goods to neighboring countries, and then the neighboring countries sell them on to the US, and it will reduce.”
US trade laws require goods to undergo “substantial transformation” in a country, usually including processing or manufacturing that adds significant value, to qualify as originating there for tariff purposes.
Adverts on social media platforms such as Xiaohongshu (RedNote) offer to help exporters ship goods to countries such as Malaysia, where they will be issued with a new certificate of origin and then sent to the US.
An advert posted on Xiaohongshu by “Ruby — Third Country Transshipment” this week: “The US has imposed tariffs on Chinese products? Transit through Malaysia to ‘transform’ into Southeast Asian goods!”
“The US has set limits on Chinese wooden flooring and tableware? ‘Wash the origin’ in Malaysia for smooth customs clearance!”
South Korea’s customs agency had found foreign products worth US$21M with falsified countries of origin in the first quarter of this year, most of them coming from China and almost all destined for the US.
Vietnam’s industry and trade ministry has called on local trade associations, exporters and manufacturers to strengthen checks on origins of raw materials and input goods and to prevent the issuing of counterfeit certificates.
Thailand’s foreign trade department has also unveiled measures to tighten origin checks on products bound for the US in order to prevent tariff evasion.
Some logistics companies could ship goods from China to Port Klang in Malaysia, from where they would move items into local containers and change their tags and packaging. The companies have connections with factories in Malaysia that could help issue certificates of origin.
“They [Malaysian customs] are not very strict.”
Origin-washing was one of the two main methods being employed to avoid Trump’s new levies. The other was mixing high cost items with cheaper goods, so exporters could falsely claim a lower overall cost of shipments.
The owner of a consumer goods manufacturer based in Dongguan said two domestic industry associations had introduced him to intermediaries who offered “grey area” tariff workarounds.
“Basically I only ship to a Chinese port and they take it from there.” The intermediaries had offered to arrange the workaround for just 5 yuan ($0.70) per kg shipped.
“These agencies said small- and medium-sized enterprises like us can weather the tariff hit better because there’s always grey areas. I hope it’s true. The US is a big market — I don’t want to lose it.”
The proliferation of efforts to avoid tariffs has caused concern among US business partners. One senior executive at a top 10 independent seller on Amazon said they had observed instances where shipments’ origins had been altered, risking confiscation by US customs authorities. The executive said they were reluctant to accept offers of assistance from their Chinese suppliers, such as having them act as the “importer of record” into the US and paying tariffs based on the cost of manufacturing rather than the retailer’s higher cost of purchase. The executive said they worried that a supplier might report a false value. “You’re putting a lot of trust in a Chinese supplier.”
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Byron Wan
@Byron_Wan
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
Show more 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
