Switching around the 18,927 codes that identify imported goods is an increasingly popular way some Chinese exporters are ducking American tariffs according to the Wall Street Journal report: New Era of Tariff Dodges.
Every product imported into the U.S. carries a 10-digit designation called an HTS code, of which there are 18,927 in all. Like a taxonomic version of Noah’s Ark, the code provides a common language to bridge disparate markets and identify products in all their variety.
In a world of increasing tariffs, the code has another function: evading those levies. The business of code-fudging is expanding in step with tariff increases, undermining U.S. efforts to shield American business from foreign competition, according to importers, customs officials, trade attorneys and shipping brokers.
After President Trump in March ordered 25% levies on steel, Chinese steel plates were being imported coded as turbine parts, said Timothy Brightbill, a trade partner at law firm Wiley Rein LLP, which often works on misclassification and trade-remedy cases. In the first six months of 2018, imports of steel plates fell 11%, year-over-year, while imports of “electric-generating sets,” a turbine classification, soared 121%.
Diamond saw blades imported from China are subject to 82% tariffs because of a past dumping ruling by the Commerce Department. In July, according to U.S. Customs, two California importers controlled by a Chinese manufacturer tried to dodge the tariff by coding diamond saw blades as grindstones.
>In China, exporters swap information about tariff codes on websites such as Yishanghuiyou—“Friends Through Commerce”—an offshoot of the wholesale platform 1688.com owned by Alibaba Group Holding Ltd.
“We want to export a batch of plywood trays,” wrote someone using the name Zhang Liang on a Yishanghuiyou forum in January. “What’s the tariff code for plywood that can make it avoid inspections?”
“Our company can help,” replied another user, suggesting they get in touch. Neither user responded to requests for comment.
I suspect very little gets into China via this mechanism. Relabeling soybeans as turbine parts is not likely to work.
This is yet anther example of the stupidity of it all.
Mike “Mish” Shedlock
And this just in:
The way a see Trump is like that cartoon where wily coyote is trying to plug all the liking holes on the dam to no avail. This new ethanol mandate will to have unintended consequences and open several more holes…
Ethanol is environmentally destructive since growing plants for Ethanol uses up water, fertilizer and the land and Ethanol energy content is inferior compared to gasoline.
There should be absolutely NO support by government for Ethanol.
The problem is when politicians have addicted citizens to free money given to them in either welfare or subsidies then those politicians must keep that welfare and those subsidies flowing if they want to get re-elected.
Another common ploy is to export things from China to Canada, and then add a sticker that says “Made in Canada”, before re-exporting it to the US.
As long as the ambulance chasers with the most intimate knowledge about the exact requirements to take advantage of all these loopholes keeps flowing campaign funds and other perks to DC, we can always tell the dupes that “we” are beating “them”, and that they should be happy and cheer for us. No need to get into the finer points about “we” being the usual suspects, and “them” being the dupes themselves…
Another example where the problem with Trump’s tariffs is TOO FEW tariffs instead of too much tariffs.
All products made from steel and aluminum should have had their tariffs raised with the same amount as steel and aluminum when Trump started the steel and aluminum tariffs.
Trump and his staff need to WAKE UP and put tariffs on all steel and aluminum products so that US manufacturers making products out of steel and aluminum now paying higher prices for steel and aluminum are not disadvantaged against foreign manufacturers.
Wouldn’t they still be disadvantaged in a global market? Obviously it would provide an advantage in the local US market, but all other global manufacturers would be able to take advantage of lower priced products for the non-US market. And US manufacturers become disadvantaged as they have to pay higher parts costs.
Yes they would be disadvantaged in a global market in products where they do not have a technological advantage or patented advantage in manufacturing or design but just stopping the disadvantage in us market by expanding tariffs would be a good thing.
With EU it should be a requirement in the trade negotiations between EU and USA that EU also put tariffs on Chinese products in a similar way that USA does.
Right now there is political pressure in EU due to the new IPCC report how global warming is accelerating so since China has permission in the Paris agreement to keep increasing it’s CO2 emissions and since China is now the top emitter of CO2 Trump would be wise to demand tariffs on Chinese made products based on CO2, even though USA has opted out of the PAris agreement under Trump.
The Paris agreement on Climate Change was a total sham and betrayal of all Europeans and Americans since it gave developing economies like China and India and Pakistan and all of Africa a permission to keep rapidly increasing their CO2 emissions meaning quicker global warming (if the theory is valid) while at the same time putting European and American manufacturing in chains despite factories, standards and processes in EU and USA being much better and less environmentally damaging than factories, standards and processes in China, India, Pakistan and all of Africa.
Even smarter would be to skip the tariff on steel aluminum, and instead put the tariff on any product containing steel and aluminum. That would motivate manufacturers to make things in the US, rather than the current tariff which motivates them to move production overseas.
Just like wrt Keynesian clowns and printing/stimulus: The reason it never works, is that no matter how much of it we do, we never do enough.
What we really need, is a million percent tariff on every air molecule blowing in across the Mexican border. And when that doesn’t work, we’ll raise it to two million. And print some more money. To stimulate someone.
Works for fentanyl. Why wouldn’t it work for everything else? Capitalism will find a way.
Trump promised something about simplifying regulations. Sounds like simplifying this extreme number of possible codes by eliminating as many as possible would be a good thing to do. Someone should send him a tweet. Give him something to focus on instead of trash taking all the time.
The joys of unconstrained, unlimited government self-servingly meddling in the lives of their betters….
My favorite story (30 years ago) was about a sneaker importer in the US who received all the right shoes at one port, and the left shoes at another. Since neither port had a complete pair of shoes, no tax could be levied. Of course the sneakers were paired in the warehouse before final distribution.
“My favorite story (30 years ago) was about a sneaker importer…”
That’s kind if SNEAKY….