Chinese manufacturers are reportedly skirting tariffs imposed by the Trump administration by intentionally mislabeling products and presenting the goods as being made in another country.
What are the details?
The Wall Street Journal reported that amid the current U.S. trade war, Chinese firms have moved billions of dollars worth of levied products through transshipment — where exports are sent to other countries (sometimes minimally altered before being slapped with new "Made in..." labels) and then re-exported as if they originated from the nation they pass through.
Vietnam has been particularly exploited by the practice, and the country's officials are sounding the alarm. Vietnamese Ministry of Industry and Trade decried the trend, issuing a statement saying, "The phenomenon of trade fraud through labeling of the origin of goods as being produced in Vietnam is increasing. Such fraudulent labeling not only directly affects products and consumers, but also significantly reduces the reputation and competitiveness of goods manufactured in Vietnam."
Last week, Foreign Minister Phan Binh Minh warned the Vietnamese National Assembly that the continued transshipments from China "will sabotage Vietnamese brands and products and it will also affect consumers. We could even get tariff retribution from other countries, and if that happens, it will hurt our economy," USA Today reported.
The outlet further noted that America is currently Vietnam's largest export partner. But Vietnam isn't the only country through which Chinese goods are being re-routed. A spokeswoman for U.S. Customs and Border Protection confirmed to The Journal that transshipments were also flagged in Malaysia and the Philippines in recent months.
President Donald Trump is set to meet with Chinese President Xi Jinping at the upcoming G20 summit in Osaka, Japan. On Wednesday, President Trump told Fox Business that he is prepared to impose further tariffs on another $325 billion worth of Chinese goods if a deal is not reached.
During the interview, President Trump acknowledged supply chain shifts resulting from U.S. tariffs, telling host Maria Bartiromo, "Well, a lot of companies are moving to Vietnam, but Vietnam takes advantage of us even worse than China."