How China Is Dodging US Tariffs

Some Chinese exporters are routing goods through third countries to skirt the steep tariffs the United States has imposed on the world’s second-largest economy.

Chinese social media platforms are increasingly being courted by freight brokers offering the service since the Trump administration hiked duties on Chinese imports to as high as 245 percent.

Why It Matters

Instances of transshipment became more frequent after Trump launched the trade war against China during his first term, citing alleged unfair trade practices and other grievances that prompting U.S. Customs and Border Protection investigations. Mislabeling origins was why the administration included uninhabited islands on its tariff list in early April.

China exports roughly five times as much to the U.S. as the other way around, and finding new markets takes time. The U.S.’s top trade partner, China, has vowed to “fight till the end” and imposed a reciprocal 125 percent tariff on most U.S. imports, among other countermeasures.

Newsweek reached out to the Chinese Foreign Ministry and U.S. Customs and Border Protection via email for comment.

What To Know

Chinese social media platforms have seen a spike in logistics firms offering exporters “place-of-origin washing” services.

Malaysia has become a common waypoint for these goods. The Southeast Asian country was slapped with a relatively low 24 percent tariff and is currently—like most countries other than China—subject to a baseline 10 percent tariff during the 90-day pause Trump ordered to allow trade partners time to negotiate over alleged trade imbalances and “unfair” duties on U.S. goods.

“The U.S. has imposed tariffs on Chinese products? Transit through Malaysia to ‘transform’ into Southeast Asian goods!” the Financial Times quoted one such ad as saying, posted by an account named “Ruby—Third Country Transshipment.”

The practice has raised concerns about Malaysia’s reputation, with trade groups calling on authorities to investigate instances of fraudulent declarations of origin.

Malaysia Deputy Minister of Plantation and Commodities Chan Foong Hin also urged businesses not to take part in the practice. He said the ministry had recently moved to strengthen oversight of Malaysia’s rubber glove industry.

“With immediate effect, any exporter of gloves certified by the Rubber Bureau will only be allowed to export locally manufactured rubber gloves,” reported Malay Mail.

South Korea’s customs agency said it discovered 29.5 billion won ($20.81 million) in country-of-origin violations in the first quarter of 2025 alone, 97 percent of which were bound for the U.S.

That’s nearly as much as the 34.8 billion won of such violations discovered in 2024, during which U.S.-bound goods comprised 62 percent.

South Korea’s customs agency has since created a special task force to tackle illegally falsified exports.

What People Are Saying

Airfreight Forwarders Association of Malaysia, quoted by local media: “[Origin washing] may also jeopardize Malaysia’s standing as a trusted and responsible trade partner in the global supply chain.”

Trade expert Henry Gao, on X (formerly Twitter): While the tariffs [on Malaysia and other Southeast Asian countries] may not make traditional economic sense, they might make strategic sense—as a deterrent against serving as transshipment hubs for China.

“In effect: allow transshipments, and your own exports get punished. Is it crude? Yes. But could it be an effective way to tackle the transshipment issue? Possibly.”

What Happens Next

Many Chinese firms will likely struggle to redirect goods originally made for U.S. markets. The government has reportedly been encouraging merchants to turn to local consumers instead.

However, efforts to offload excess inventory will boost supply and lower prices, which could worsen China’s ongoing deflationary cycle and further dampen hiring.

Analysts have warned of price increases and shortages in the U.S. if China and the U.S. fail to reach a deal soon.