GateHouse Media data analysts say Chinese importers are misclassifying of products to the US by changing product codes to avoid the higher tariffs. In particular, the analysis reveals nearly a dozen Chinese imports — including woven fabrics, furniture mounts and lamps are being misclassified. The findings correspond with the information provided during interviews with at least 20 traders, brokers, economics researchers and former and current government officials that offer a rare peek into how easy it is for some companies to avoid Trump’s new duties.
To date, the United States has imposed additional tariffs on some $250 billion in Chinese products. China has responded with tariffs of its own, affecting some $110 billion of U.S. goods .
Every type of product shipped to the United States bears its own 10-digit classification code, known as the Harmonized Tariff Schedule code, or HTS. Dried black pepper is 0904.11.00.20, for example; dried white pepper is 0904.11.00.30.
GateHouse Media examined several pairs of similarly coded Chinese imports where one was subject to the increased tariffs and the other was not. The data, obtained from the U.S. Census Bureau, showed that imports of the affected products decreased after the trade war while those of the unaffected products increased.
The year before the tariff took effect, China exported $254 million in discharge lamps to the United States and about $1.5 billion in LEDs. The next year, with the tariff in full effect, Chinese discharge lamp imports dropped to $189 million and LEDs jumped to $1.7 billion.
Trump imposed an additional 25 percent tariff on discharge lamps.
Texas-based University Furnishings was blamed for misclassifying wooden bedroom furniture imported from China under the code of office furniture. It cost the company $15 million to settle a lawsuit under the False Claims Act. The U.S. Department of Justice said the company, which resolved the claim in 2015, had conspired with others from 2009 to 2012 to dupe customs officials and avoid paying anti-dumping duties. The company, however, continued to deny any liability or wrongdoing.
The CBP collected some $40.6 billion in duties in FY2018 alone — a 23 percent increase from the previous fiscal year, mostly attributed to Trump’s new tariffs on China, according to a July CBP report.
The agency also issued fines totaling more than $92.1 million and, along with U.S. Immigration and Customs Enforcement, seized shipments valuing more than $1.3 million for tariff-related fraud and violations during the same time period, the report states.
Jeffrey Newman represents whistleblowers in tariff customs evasion cases including whistleblowers living outside the US.