Beijing’s ‘Gray Trade’ Tariff Avoidance Scheme

China is starting to ship its goods to low-tariff countries first, then export them to the United States to evade high tariffs.

A truck passes by shipping containers at the Port of Los Angeles in Long Beach, Calif., on Sept. 1, 2019. Mark Ralston/AFP via Getty Images

Commentary

Is a new boom in deceptive trading practices taking shape in many parts of the world? As the U.S.–China trade war intensifies, it certainly looks that way.

China’s Gray Trade Strategy Blunts Impact of US Tariffs

With U.S. tariffs reaching 145 percent on Chinese imports—at least at the time of this writing—Beijing’s new strategy seems to include the use of so-called gray trade to bypass American trade barriers. Gray trade involves rerouting goods through low-tariff countries, such as Vietnam, Mexico, or Malaysia, to conceal their Chinese origin and thereby reduce U.S. import duties.