Chinese exporters are stepping up efforts to avoid tariffs imposed by U.S. President Donald Trump ships through third countries to cover up its true origins.
China's social media platforms are full of ads with "washing from origin" on them, and the inflow of goods from China keeps alerts from neighboring countries to ensure they become a stage post for actually trading goods for the United States.
The growing strategy underscores exporters’ concerns that the new tariffs Trump imposed on Chinese goods will deprive them of access to one of the most important markets.
“The tariffs are too high,” said Sarah Ou, a salesperson at Baitai Lighting, an exporter in Zhongshan, a city in southern China. “(But) we can sell goods to neighboring countries and then neighboring countries sell them to the United States, which will reduce.”
U.S. trade law requires that goods undergo a “substantial transformation” in a country, often including processing or manufacturing to increase value in order to originate for tariff purposes.
However, ads on social media platforms such as Xiaohongshu are proposed to help exporters deliver goods to countries such as Malaysia, where they will get a new certificate of origin and then send them to the United States.
"The United States imposes tariffs on Chinese products? Transit through Malaysia will "transform into Southeast Asian items! "A commercial was released on Xiaohongshu this week under the name "Ruby - Third Country Transshipment".
"The United States has set restrictions on Chinese wood floors and cutlery? 'Wash Malaysia' for smooth attention!" It added. The person contacted through the details provided in the ad declined to comment further.
South Korean customs firm said last month that in the first quarter of this year, it discovered $29.5 billion ($21 million) worth of foreign products, most of which are from China, and almost all are destined to be the United States.
"In recent circumstances, our country has been used as a bypass to products that avoid different tariffs and restrictions due to changes in the U.S. government's trade policy," the agency said in a statement. "We have found many cases where the origins of Chinese products have been faked as Koreans."
Vietnam's Ministry of Industry and Trade last month called on local trade associations, exporters and manufacturers to strengthen inspections on the origin of raw materials and input goods and to prevent the issuance of forgery certificates.
Thailand's foreign trade department also announced measures last month to strengthen inspections of origin of products bound to the United States to prevent tariff evasion.
Baitai’s OU said, like many Chinese manufacturers, the company ships the goods as “free on board”, according to which buyers take responsibility for the products once they leave the departure port, reducing the statutory risk to exporters.
"Customers only need to find a port in Guangzhou or Shenzhen, and as long as (the goods) go there, we complete the task... (afterwards) it has nothing to do with our business."
Sales staff at the two logistics companies said they could ship the goods to the port of Klang in Malaysia, from where they transferred the items to local containers and changed their labels and packaging. Sales staff, who declined to be named, said the two companies had links to their factories in Malaysia and could help issue certificates of origin.
“The United States has to know this,” one person said. “It’s not too crazy, so we control the quantity (the orders we accept).”
Another salesperson said: "They (Malaysian Customs) are not very strict."
China's Ministry of Foreign Affairs and Commerce and the Malaysian government did not immediately respond to requests for comment.
A consultant who advised cross-border trading companies said washing of origin is one of two main ways to avoid Trump’s new taxation. The other is to mix high-cost items with cheaper goods, so exporters may mistakenly demand lower costs of goods, the consultant said.
Owners of consumer goods manufacturers in Donggui, a southern Chinese city, said two domestic industry associations have introduced them to intermediaries that offer "gray areas" tariff solutions.
The boss said: "Basically I only shipped it to Chinese ports, and they took it from there." The intermediary was willing to arrange the solution to be arranged at a price per kilogram in real time.
“These agencies say that small and medium-sized businesses like us can make tariffs better because there are always grey areas,” she said. “I hope it’s true. The United States is a big market – I don’t want to lose it.”
The surge in efforts to avoid tariffs has attracted the attention of U.S. business partners. A senior executive of Amazon's top 10 independent sellers said they have observed that the origins of the goods have changed, risking confiscation by U.S. customs authorities.
Executives said they were reluctant to accept assistance from Chinese suppliers, such as having them act as "record importers" in the United States and pay tariffs based on manufacturing costs rather than the higher purchase costs of retailers.
Executives said they were worried that suppliers might report false value. They said: "You have a lot of trust in Chinese suppliers."