Chinese Firms Are Reportedly Using Shell Entities To Dodge Trump's Tariffs

Chinese firms are reportedly using shell entities to circumvent the hefty tariffs imposed by the Trump administration. These shell importers, which are relatively easy to establish, could potentially hit the U.S. government’s revenue collection projections.

What Happened: These shell entities, typically registered as limited liability companies (LLCs) in the U.S., are being utilized to dodge customs duties, according to a report by Nikkei Asia.

“This just becomes a game of whack-a-mole,” commented Nicholas Birch, an international trade attorney at Schagrin Associates, according to the report.

These shell entities provide a “surety bond” to U.S. officials to cover expected tariff payments. However, these bonds can be significantly smaller than the actual duties, enabling the shell entities to forfeit their bonds and vanish, only to establish another shell company the following week.

Experts caution that the lack of customs supervision on importers, combined with the simplicity of creating a shell importer, heightens the risk of trade fraud.

“CBP does not screen these entities,” stated Paula Connelly, a former customs broker and senior member at trade law firm Sandler, Travis & Rosenberg, according to the report.

See Also: Ironically, Because Of All The New Tariffs, It’s Now Way Cheaper To Make Our Chocolate Bars Outside The US,’ Says MrBeast

The report added that shell companies are merely one tactic Chinese companies employ to reduce the costs of exporting to the U.S. Other strategies include undervaluing products and concealing the origin of products by shipping them via third countries.

Why It Matters: The tariff war between the U.S. and China has been escalating, with President Trump intensifying import taxes on China to a staggering 145% on April 12. In retaliation, China raised its own tariffs to 125%.

Chinese manufacturers and distributors, affected by these tariffs, were proposing illegal strategies to U.S. Amazon sellers to decrease their tariff duties. These tactics included understating the value of their imported goods and misrepresenting the shipment's value.

By April 16, the Trump administration had raised tariffs on Chinese imports by up to 245%.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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