Gaidar Institute experts have assessed the chances of Chinese suppliers circumventing the US tariffs

According to Dmitry Kuznetsov and Alexander Firanchuk, researchers at the Gaidar Institute’s International Trade Department, such a difference in tariffs creates incentives for false declarations. «It is obvious that under the circumstances of a trade war, the demand for bypass schemes with a completely formal change in the country of origin will grow — especially given that there is no time for a real transfer of production and no understanding of the long-term nature of the current tariff confrontation," says Alexander Firanchuk. He is also sure that there will be intermediaries who will agree to help in such schemes for a «quite moderate commission».

Olga Ponomareva, expert at the Economic Policy Foundation, noted that Southeast Asian countries, where China has been actively investing in recent years, are developing a base for establishing «new value chains with the participation of Chinese companies." «In 2023, more than a third of China’s foreign direct investment went to manufacturing in ASEAN countries — this is a solid indicator," she explained.

Dmitry Kuznetsov emphasized that the US government is likely to react to such schemes by demanding justification of the origin of goods. However, in his opinion, «it will not be possible to keep track of all of them (at least at once). He also noted that «if there are signs that a certain country is turning into a transit hub for Chinese goods, tariffs for such hub can be promptly raised».

Alexander Firanchuk pointed out the analogy with the situation of circumventing sanctions against Russia, where third countries play a key role. However, he emphasized a fundamental difference: in case of sanctions, restrictions are imposed by the exporter, while in the situation with tariffs — by the importer. «The manufacturer is far from always able to control where his goods end up after the first shipment and whether they will be subsequently resold. That is why a significant part of goods coming into Russia are not traceable, which has simplified the implementation of parallel import schemes," the expert explained.

Dmitry Kuznetsov also noted that the country of origin of goods in imports is much more carefully monitored than the country of destination in exports.

Image by pch.vector on Freepik