U.S. tariffs evasion method discovered by China: New tactic revealed
So, Here's the Scoop:
It's become common practice for Chinese companies to implement the DDP (Delivery Duty Paid) strategy to wriggle out of import tariffs. They do this by understating the value of their goods or altering their descriptions to lower the duty amount, explains the Financial Times (FT). Is it true? Well, FT's Flexport CEO, Ryan Petersen, confirmed the rumors.
China has been pushing DDP deals where they cover all shipping and customs costs, and then sell their products to U.S. companies at a lower price than would be otherwise paid. This scheme may seem attractive to U.S. buyers initially, but it's often used by Chinese suppliers to skimp on tariff payments illegally.
It's not all sunshine and roses for U.S. Customs and Border Protection (CBP) either. They're left chasing down the real importer of record, usually the U.S. buyer, for accurate customs compliance and duty payments. If tariffs go unpaid due to fraud, shipments may be seized or held, leading to delays, storage fees, and potential penalties.
U.S. importers may also face legal consequences under statutes like 19 U.S.C. § 1592 and even criminal charges if found complicit in customs violations, even if the misconduct stems from their Chinese suppliers. CBP is cracking down on these schemes, with increased investigations and seizures related to undervaluation and tariff evasion under DDP arrangements.
The trouble is, many U.S. companies don't fully understand DDP contracts, believing the seller's responsibility to pay tariffs absolves them from any customs issues. When DDP deals backfire, U.S. buyers can end up with a hefty customs bill, legal scrutiny, and the need for costly legal action to recover losses from overseas sellers.
In conclusion, the widespread use of DDP by Chinese exporters as a tariff evasion method puts a significant strain on CBP, makes it harder for them to enforce trade laws and protect revenue. As for U.S. importers, they should be wary, demand transparency, and ensure compliance to avoid these costly pitfalls.
China's implementation of DDP strategies in their business dealings with US companies has raised concerns in the realm of finance and general-news. This practice, which includes understating the value of goods or altering their descriptions to lower duty amounts, has been confirmed by FT's Flexport CEO, Ryan Petersen, and is suspected to be a form of illegal tariff evasion.
US importers, in their enthusiasm for attractive pricing under DDP deals, may unknowingly become complicit in customs violations, potentially facing legal consequences and expensive legal battles to recover losses from overseas sellers. The US Customs and Border Protection (CBP) faces challenges in enforcing trade laws and protecting revenue due to the widespread use of DDP by Chinese exporters.
