The White House announcement of new trade tariffs on products from China including washing machines and solar energy cells may result in efforts to evade those tariffs in ways recently seen in furniture, honey and steel products from China. In those instances, duties imposed by the United States for “dumping” products into the US market at low prices, resulted in a series of schemes by Chinese product manufacturers to evade the tariffs and duties imposed. These schemes including “trans shipping” products to other no tariff nations such as Taiwan and Malaysia and re-labeling the products to hide the true countries of origin in order to evade our tariffs. In the case of Chinese steel, one manufacturer shipped the steel to Mexico where a factory had been built in a mountain hideaway and where the steel was reformed into new products, re-labeled and trucked into the United States evading the customs tariffs.
This summer, Customs and Border Protection (CBP) officials engaged in investigations and prosecutions to collect millions of dollars in unpaid anti-dumping penalties after it was revealed that Chinese companies hid the source of exports to the United States by shipping through other countries. In addition, there has been a spike in whistleblower cases filed under the False Claims Act (FCA) resulting in investigations and settlements through the Department of Justice and United States Attorneys Offices in which the customs schemes were the bases for the cases. The investigations and whistleblower cases revealed a clear pattern of shipments from China through Thailand to evade duties on various products including wire hangers and other products.
In addition, honey originating in China has been shipped to a second tariff free countries, where the pollen has been removed to make it more difficult to determine the country of origin. Then the barrels are re-marked shipped to the United States from the second country in order to evade the dumping tariffs.In one case, contaminated Chinese honey contaminated with chloramphenicol and other illegal antibiotics, which are dangerous to humans, was shipped to Canada and then to a warehouse in Houston Texas where it was sold to Jelly maker J.M. Smuckers and national baker Sara Lee. Before the FDA learned that the Chinese honey was tainted, Smuckers had sold 12,040 cases to Ritz Carlton Hotels. Over the past 18 months, the U.S. imported 208 million pounds of honey, 60 percent from Asian countries including the laundering points for Chinese honey including 45 million pounds from India alone.