Combating tariff evasion does not solve imbalance between US and China

O strengthening US controls on Chinese products exported through third countries will not resolve trade imbalances between Washington and Beijing, according to an analysis by the U.S. think tank group CSIS.

In a recently published article, researcher Hugh Grant-Chapman of the Center for Strategic and International Studies (CSIS), based in Washington, considers that the Administration of the American President, Donald Trump, is confusing fraudulent practices of circumvention of customs tariffs with the legitimate reorganization of international production chains.

“The White House confuses entirely legitimate business actions with criminal behavior,” says the researcher, when analyzing a report published in August by the Trump Administration, entitled The Great Transshipment Scam.

The White House document accuses China of resorting to more than 40 intermediate savings to circumvent the tariffs imposed by the United States by rerouting Chinese goods.

According to Grant-Chapman, the US Administration extended the concept of re-export, traditionally associated with the passage of goods through third countries without significant transformation, to include products actually manufactured in those markets with Chinese components.

The investigator acknowledges that there are documented cases of customs fraud, notably involving batteries, steel products and solar panel components, but maintains that these practices explain only part of the indirect presence of Chinese products on the US market.

“Re-exporting, by itself, is not inherently illegal or undesirable from the point of view of public policies,” he stresses.

A study cited by the CSIS indicates that, in 2024, Mexico and Vietnam were responsible, respectively, for 23% and 15% of Chinese added value that reached the United States indirectly.

However, the investigation concludes that much of these flows are the result of industrial processing processes rather than simply forwarding goods.

A study by the US Federal Reserve estimates that Chinese production in Mexico contributed about 14 percentage points to the increase in Mexican exports after tariffs imposed on goods from China in 2018 and 2019, while direct re-export represented less than one percentage point.

The CSIS analysis further shows that countries such as Malaysia, Mexico, Thailand and Vietnam have not seen a general increase in overlap between products imported from China and those exported to the United States.

On the other hand, Cambodia and Laos show more evident signs of growth of these flows, particularly in steel products and photovoltaic cells.

For Grant-Chapman, the fundamental problem lies in the structural imbalances of the two largest world economies.

In China, low domestic consumption, state support for industry and an export-oriented growth model contribute to the persistence of high trade surpluses.

In the United States, low savings, budget deficit and increased investment, particularly in artificial intelligence infrastructures, fuel the demand for imported products.

“ These macroeconomic grounds place the United States in the position of net importer and China in the position of net exporter,” explains the researcher.

The investigator recalls that in 2025 Chinese exports increased by 5.5%, although sales to the United States fell by about 20%, with some of the products redirected to other markets, including the European Union.

CSIS also notes that several intermediate countries currently benefit from US tariffs between 10 and 20 percentage points lower than those applied to China, encouraging companies to transfer productive operations to those markets.

“ A sustainable path requires a more rigorous analysis of world trade standards, a reassessment of the effects of US tariff differences on the market and a frank dialogue with business partners and leaders,” says Grant-Chapman.