US Companies are Evading High Tariffs by Labelling Goods Imported from China as “Made in Malaysia”

Companies and online merchants in the US are apparently implementing various ways to circumvent the high tariffs enforced by the US Government on goods imported from China. 

These include ‘converting’ goods imported from China to goods made in other countries with lower tariffs, including Malaysia, by routing the items through said country.

Overseas freight companies are offering US sellers to undervalue their imports from China on the paperwork 

For illustration purposes

In a report by Bloomberg, online merchants claim that they are being bombarded with suspicious offers to help avoid paying high tariffs on goods made in China by faking the value of shipments or diverting the goods through countries with lower tariffs imposed on them than China.

These offers are coming from overseas logistics firms and typically arrive via social media.

Bloomberg quoted one of these overseas logistics firms as asserting, “We can provide the solution to help you save your cost” and offering to serve as the importer for an upcoming shipment and declare a lower value.

Furthermore, Aaron Rubin, an online merchant selling martial arts gear in the US, said that he had received an offer from a freight brokerage to import one of his shipments from China.

Rubin claimed that the brokerage offered to submit paperwork to the US customs and change the USD30,000 (RM131,190) shipment value to USD10,000 (RM43,879) on the paperwork.

This change of value on paper would save the online merchant USD29,000 (RM126,817) in tariffs.

A China-based freight broker is offering to ‘convert’ imports from China to “Made in Malaysia” products for lower tariffs

For illustration purposes

Additionally, Bloomberg revealed that one China-based freight broker is offering US-based clients to divert their imports from China through Malaysia, essentially changing the label from “Made in China” to “Made in Malaysia”.

As the US is imposing 24% reciprocal tariffs on Malaysia, far lower than the 145% tariffs on China, this would considerably lower the cost of the US sellers importing the Chinese products.

However, the US Customs and Border Protection (CBP) has warned US companies from doing this as it’s illegal to deliberately undervalue shipments or lie about their origins to reduce tariffs, and perpetrators can be subject to criminal and civil penalties in the country.

So, what do you guys think of the whole situation? Share your thoughts with us in the comments.

Also read: US Announces Tariffs as High as 3,521% on 4 ASEAN Countries, Including Malaysia, for Solar Panels