Weak trade enforcement in the U.S. is allowing China to sidestep tariffs, undermining efforts to protect American industries. Chinese companies have been evading tariffs by transshipping goods through other countries, creating unfair competition. Despite legal victories, the U.S. enforcement system’s failures are costing jobs and undermining national economic security.
Author: David Rashid
May 10, 2019, felt like a turning point – that was the day U.S. President Donald Trump imposed 25 percent tariffs on a broad range of Chinese imports. For years, my auto parts company in the United States had struggled against a state-backed Chinese competitor. The tariffs offered a path to recovery.
But hope quickly gave way to frustration – not just for my company, but for manufacturers across the U.S. My competitor, like many other Chinese firms, quickly found a workaround. Exploiting the United States’ weak trade enforcement apparatus, China kept its grip on critical industries while continuing to erode our own.
My competitor had been deemed a national champion of the Made in China 2025 Program, specializing in the preparation of new rubber varieties. Just after the tariffs were implemented, they began routing their products through Thailand, falsely declaring them as Thai-origin to evade tariffs. The result? A continued flood of cheap imports that undercut the very protections the tariffs were meant to provide.
This blatant disregard for U.S. trade law isn’t just about short-term profits; it’s part of a larger Chinese strategy. Under the Made in China 2025 framework, Beijing has systematically used state subsidies, domestic protections, and industry coordination to dominate global markets.
Official statistics on trade crime are scarce – this is understandable given the nature of the crime. But reported tariff assessments and changing trade patterns from 2018 to today tell a striking story.
Trump’s Section 301 tariffs applied 25 percent tariffs on $250 billion worth of goods, along with 7.5 percent on another $120 billion. If Chinese export levels on the tariffed basket of goods to the U.S. had remained steady from the date of implementation, tariffs assessed should have totaled $426 billion by the end of 2024. Instead, U.S. Customs and Border Protection (CBP) reported just $232 billion in assessed tariffs – a staggering $194 billion shortfall. Did we truly manage to decouple by 46 percent on the basket of goods subject to tariff since the they were implemented, or have Chinese goods been finding their way through the cracks?
From 2017 to 2023, China’s exports to Thailand, Vietnam, and Cambodia surged by $111 billion annually – a 97 percent increase – while these countries’ exports to the U.S. jumped by $102 billion (126 percent). This nearly dollar-for-dollar increase is not a coincidence. Various studies, including those conducted by the Economist and Wall Street Journal, have identified this as a blatant and widespread transshipping strategy, forming a “triangle trade” framework with the U.S. Similar patterns have been observed in India, Malaysia, Mexico, and Germany.
In 2020, my company conducted a thorough investigation of our competitor: we hired overseas detectives, forensic accountants, and material labs. With incontrovertible evidence in hand, we hired trade lawyers and pursued every avenue made available by the CBP and the Department of Justice. For every door that closed, we searched out another.
After two years of inaction and over a million dollars in costs, we turned to our local congressman, Darin LaHood (R-IL), who elevated our case to the U.S. House Select Committee on the Chinese Communist Party. Following a thorough review, the committee deemed it a “blatant example of trade fraud.” Yet, even after a Department of Homeland Security raid on our competitor’s Ohio subsidiary in January 2024, the case remains under investigation. Meanwhile, our competitor continues to expand their market share, leaving us – and others like us – waiting for justice.
Jason Kenner, a former Justice Department attorney who worked with the Trade Fraud Task Force, spoke to NPR on the state of affairs of the government’s handling of trade crime: “What you have is a very fragmented approach. Everyone has their own little fiefdoms and their own little tools, and you don’t want to get into each other’s ways.”
Chronic failures in the United States’ trade law enforcement apparatus are creating a consequence-free environment for bad actors. At a recent dinner in D.C., I sat with two colleagues – Betsy Natz of the Kitchen Cabinet Manufacturers Association (KCMA) and Milton Magnus of M&B Metal Products – to present our stories to a small group of policymakers. We weren’t just sharing war stories – we were testifying to the slow-motion collapse of American industry.
Each of our businesses had spent years, sometimes decades, battling Chinese companies that used predatory pricing and transshipment to evade enforcement. The result? Once-thriving industries – auto parts, furniture, and even niche products like garment hangers – were being wiped out. Meanwhile, China consolidates its dominance, turning supply chains into instruments of power.
Natz’s KCMA represents members employing over 250,000 Americans. In 2020, after spending millions of dollars in legal fees, she and her members secured a WTO-legal antidumping and countervailing duties decision, aimed to level the playing field against unfairly priced cabinet imports from China.
Their triumph was short-lived. Chinese manufacturers quickly adapted by transshipping cabinets through Vietnam and Malaysia to evade duties. A questionable audit by CBP’s Office of Regulations and Rulings overturned prior enforcement decisions, leaving her industry vulnerable.
“Our industry is bleeding,” Natz explained, as illegal imports continue to flood the market, putting hundreds of thousands of American jobs at risk. In early January, the Court of International Trade issued a remand order, directing CBP to reconsider its position. Another round of briefings will take place before a final ruling is issued.
Magnus’ Alabama-based company is the last of eight U.S. wire hanger manufacturers surviving from the time China joined the WTO – a sobering reminder of what predatory pricing can do to an industry. Despite securing antidumping duties in 2008, Magnus has been locked in a costly cycle of legal battles as Chinese manufacturers reroute goods through Thailand, Malaysia, India, and other countries to evade penalties. “Every victory is met with a new violation,” he explained, “leaving little time or resources to grow the business.”
The impact of trade fraud is grievous and pervasive, encompassing industries as diverse as agricultural equipment to medical devices to railway equipment to steel and aluminum to honey and garlic. Few sectors have been spared.
Washington has a choice: act or continue to allow trade crime to erode U.S. industry from within. In December, the House unanimously passed the Protecting American Industry and Labor from International Trade Crimes Act, sponsored by Representative Ashley Hinson (R-IA) which would create a dedicated Trade Crime Unit within the Criminal Division of the Department of Justice. By centralizing enforcement efforts and providing the necessary resources to prosecute trade crimes effectively, this bill offers a crucial step forward. But the bill stalled in the Senate and must now be reintroduced in the new Congress.
Meanwhile, many bipartisan efforts such as Fighting the Trade Cheats Act and Level the Playing Field 2.0 Act remain under committee review – a recognition that stronger trade enforcement is needed. But legislation alone is not enough. While tariffs have disrupted unfair trade practices, enforcement gaps leave ample space for state-sponsored bad actors – particularly from China – to exploit the system and entrench their advantage. U.S. leadership must ensure that enforcement is as resolute as the policies themselves, or these moves risk becoming little more than half measures.
Trade figures and firsthand industry accounts tell a clear story: weak enforcement isn’t just an economic failure; it’s a strategic vulnerability. The unchecked flow of tariff-evading imports is eroding the United States’ industrial foundation, deepening dependence on a rival that systematically exploits gaps in the system. This is not just about jobs or revenue losses; it is about sovereignty. If Washington continues to overlook trade fraud at this scale, Beijing won’t just outcompete U.S. industries – it will set the terms of the United States’ future.
Credits: TCA, LLC.