Commentary: How Chinese imports are skirting Trump's tariffs
That may be good news for shoppers, because it means cheap Chinese goods are still making it to US stores despite the higher costs imposed by President Trump's new import taxes. But shifting trade patterns will surely get Trump's attention, and the tariff-happy president could easily put a stop to it by raising import taxes on what are turning out to be loophole countries.
Trump's aggressive tariff regime is meant to make most imported products more expensive to encourage more domestic production. But Trump's uneven approach has created opportunities for a kind of trade arbitrage that was all but inevitable. As things stand now, Trump has imposed new import taxes of 30% on most goods from China but only 10% on imports from most other nations. That 20% differential is a big advantage for the less-tariffed countries.
Sure enough, trade data shows that Chinese exporters are almost certainly "transshipping" goods to the US by passing them through neighboring countries. Chinese data shows that exports to the US dropped 35% in May compared with a year earlier. But during the same period, Chinese exports to six other Asian nations jumped 15%, including a 22% increase in exports to Vietnam and Thailand, a 12% jump in exports to Singapore, and an 11% rise in shipments to Indonesia.
"[China's] direct exports to the US are down sharply, but its exports to all kinds of places across Asia are up massively," economist Robin Brooks of the Brookings Institution posted on social media on June 9. "These are obviously transshipments to the US via third countries."The US Department of Commerce hasn't yet published trade data for May, but data for April shows the mirror image of the Chinese data. Imports from China fell 20% from 2024 levels, while there was a 48% jump in Vietnamese imports, a 32% jump in shipments from Thailand, and a 16% increase in goods from Malaysia.
Trade experts have been predicting this shift since Trump began imposing new import taxes in February, because it's the same thing that happened during the trade wars Trump waged during his first presidential term. Vietnam, in particular, was a big beneficiary of Trump's tariffs on Chinese imports in 2018 and 2019. While imports from China fell by 11% from 2017 to 2019, imports from Vietnam boomed by 43%.
Read more: What Trump's tariffs mean for the economy and your wallet
Since Trump's first trade war, many Asian producers and their US customers have carefully diversified so they're not overdependent on China. The US now imports less clothing from China, as one example, and more from Bangladesh, Indonesia, Pakistan, and India.
Transshipment can mean that some products are fully assembled in China and simply make a brief stopover in another country before heading to the US so that their country of origin isn't China. Governments tend to discourage that, however, because those countries gain little from merely serving as a way station for Chinese products headed to the US. Plus, it may attract unwanted attention from Trump.
Chinese companies are also increasingly building their own production facilities outside of China. "There are two ways to transship," Jason Judd, executive director of the Global Labor Institute at Cornell University, told Yahoo Finance. "In one, you're just cheating. In the other, you disassemble your product in China and send the inputs and the know-how to a new place." In Cambodia, for example, most of the companies making goods that go to the US have Chinese ownership.
Trump's "reciprocal" tariffs — on ice for the moment — are meant, in part, to target countries that are way stations for Chinese products. When Trump announced those nation-by-nation tariffs on April 2, Asian trade partners other than China got hit with some of the highest rates.
The new tariff on Chinese imports was 34%. For Cambodia, the new tariff rate was 49%. Vietnam: 46%. Thailand: 36%. Indonesia: 32%. Malaysia: 24%. Those rates weren't based specifically on transshipment of Chinese products but on the size of the trade deficit in goods each country has with the US. The larger the deficit, the higher the tariff.
Read more: 5 ways to tariff-proof your finances
Trump suspended those tariffs on April 9, following a week of mayhem in financial markets. That eventually left the tariff rates at 30% on most imports from China and 10% on most imports from every other country. But Trump said the reciprocal tariffs could go back into effect if nations don't make trade deals with him one by one by a July 9 deadline.
By then, a boom in imports from Asian nations other than China will give Trump plenty of justification for more reciprocal tariffs. But he may choose to overlook it.
Trump seems to have a much bigger trade beef with China than he does with other nations. His advisers are also telling him that high tariffs across the board could mean shocking price increases on clothing, electronics, appliances, and many other things just as Americans start their back-to-school shopping this summer. After that will come a Christmas season possibly starring Trump as the Grinch.
So Trump might end up talking tough on China and looking the other way as the country's products enter the side door. That would make stealthy Chinese imports an unintended innovation triggered by Trump's trade war.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
Click here for political news related to business and money policies that will shape tomorrow's stock prices.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
24 minutes ago
- Yahoo
UN chief urges tech sector to power data centers with renewables
By Valerie Volcovici WASHINGTON (Reuters) -U.N. Secretary General António Guterres on Tuesday called on tech companies to power the build out of data centers with 100% renewable energy by 2030, even as the industry turns to gas and coal-fired power plants to meet surging demand. The secretary general made his case for why he believes energy-hungry data centers should lock in a future of clean energy, saying the transition to renewable energy is inevitable, even as some countries and companies still embrace fossil fuels. "The future is being built in the cloud," Guterres said in a speech at the United Nations' headquarters in New York. "It must be powered by the sun, the wind, and the promise of a better world." His appeal to technology companies comes a day before U.S. President Donald Trump unveils his administration's AI Action Plan, which is expected to contain a number of executive actions aimed at easing restrictions on land use and energy production to unleash artificial intelligence development. Trump has declared a national energy emergency to address the vast amounts of energy needed by data centers to power AI to compete with China and enable him to ease environmental restrictions to build more power plants fueled by gas, coal and nuclear. Top economic rivals, the U.S. and China, are locked in a technological arms race over who can dominate AI. At the same time, Trump has issued executive orders and signed the One Big Beautiful Bill Act that curtails the use of incentives for wind and solar energy, which dominate the queue of new power generation waiting to connect to the electric grid. Guterres also appealed to governments to ready new national climate plans to deliver the goals of the Paris climate agreement by September that will lock-in a transition away from fossil fuels. He said this moment is an opportunity for governments to meet all new electricity demand with renewables and use water sustainably in cooling systems.
Forbes
24 minutes ago
- Forbes
Can States Handle Disasters Without FEMA? The Legal Gaps Business Leaders Should Know
HUNT, TEXAS - JULY 6: Vehicles sit submerged as a search and rescue worker looks through debris for ... More any survivors or remains of people swept up in the flash flooding on July 6, 2025 in Hunt, Texas. Heavy rainfall caused flooding along the Guadalupe River in central Texas with multiple fatalities reported. (Photo by) A year already marked by record-smashing heatwaves, catastrophic storms, and deadly flash floods is forcing business leaders to reckon with an unsettling question: What happens if the federal government pulls back from disaster response? The idea of handling disasters without FEMA is not an abstract worry. In recent weeks, political debates have intensified over proposals to reduce federal spending on disaster relief or even eliminate the Federal Emergency Management Agency (FEMA) after the 2025 hurricane season, as reported by NBC News. Former President Trump and some congressional leaders have floated plans to shift primary responsibility for disaster recovery to state governments—a move that could leave businesses navigating a patchwork of legal systems without the backstop they've come to rely on for decades. This uncertainty comes as disasters batter communities from coast to coast. In the first half of 2025 alone, the U.S. suffered at least 15 billion-dollar weather disasters, including historic flooding, tornado outbreaks, and prolonged heat waves, according to Yale Climate Connections. Just this past weekend, flash floods devastated Kerr County, Texas, forcing rescues and shutting down businesses in a region still recovering from earlier storms. For business owners, investors, and insurers, this brewing shift raises urgent questions: If FEMA disappears, can state laws and budgets fill the gap? Will private enterprises have to shoulder more responsibility for disaster planning and recovery? And which states are prepared—or dangerously unprepared—to protect their residents and economic lifelines in a post-FEMA landscape? A Federal Safety Net Under ThreatALTADENA, CALIFORNIA - JANUARY 30: People walk past a FEMA sign following a press conference at the ... More Altadena Disaster Recovery Center on January 30, 2025 in Altadena, California. House Democratic leaders and local officials held the press conference near the Eaton Fire burn zone to call for federal disaster assistance following the devastating wildfires in Los Angeles County. (Photo by) Since its founding in 1979, FEMA has been the cornerstone of America's disaster response. It funds emergency shelters, debris removal, rebuilding grants, and cash assistance for displaced families. Critically for businesses, FEMA programs like the Building Resilient Infrastructure and Communities (BRIC) grant fund projects that reduce future risks, a crucial buffer as extreme weather grows more frequent. Yet the agency has long faced political crossfire, with critics labeling it bloated or inefficient. Earlier this year, a lawsuit was filed against the Trump administration's previous halt to BRIC funding for certain states, highlighting how political swings can upend even well-established federal programs. If proposals to wind down FEMA proceed, business leaders would be left relying on a fragmented patchwork of state disaster laws—many of which, my research suggests, lack the resources or legal frameworks to handle large-scale crises. State Disaster Laws Are A Patchwork of Authority Every U.S. state has laws empowering governors and local officials to declare emergencies and coordinate response efforts. Yet those powers vary widely in scope, funding, and legal protections for vulnerable communities. Despite these structures, most states still rely heavily on FEMA for funding, specialized teams, and logistical support. Without FEMA, states would have to cover enormous costs themselves. For example, after Hurricane Harvey, Texas received over $13 billion in FEMA aid, money that state coffers alone could not match. The Business Risks Of A FEMA Void Businesses have more skin in this game than ever. Beyond humanitarian concerns, legal and financial risks loom if federal safety nets vanish. Federal aid often helps cover costs insurers won't, such as temporary housing, debris removal, and infrastructure repair. Without that aid, insurance companies may face larger payouts or withdraw entirely from high-risk markets. In Florida, for example, multiple insurers have already exited the market due to hurricane risks, leaving businesses scrambling for coverage. A weakened federal role could mean higher premiums, stricter underwriting, or outright denial of coverage in disaster-prone regions, especially for small and midsize enterprises without deep cash reserves. If state laws differ significantly on evacuation orders, business owners may be caught between conflicting mandates. For instance, if local officials order an evacuation, but state law vests that authority only in the governor, businesses face legal ambiguity about when to close operations, protect staff, or move inventory. Disaster response gaps also raise potential civil rights issues. Federal laws like the Stafford Act prohibit discrimination in disaster aid based on race, disability, or language. Many states lack comparable mandates, meaning vulnerable communities—and businesses serving them—could fall through the cracks if federal oversight disappears. Companies with operations across multiple states face a regulatory minefield if FEMA's uniform national standards vanish. Without coordinated federal logistics, restoring supply chains and reopening businesses could take longer, increasing downtime and losses. Which States Are Ready? Which Aren't? Few states are fully prepared to absorb FEMA's responsibilities. According to my analysis of disaster laws across the South and Mid-Atlantic, only a handful—like Virginia and Texas—have begun integrating equity planning, vulnerable population registries, and robust local emergency powers into state statutes. Other states, particularly smaller ones with limited budgets, may lack: That leaves gaps businesses can't ignore. A company operating in Virginia might navigate disaster recovery relatively smoothly, while the same company in Mississippi or Georgia could face a chaotic patchwork of legal obligations, prolonged closures, and community backlash. What Business Leaders Should Do Now While FEMA's fate remains uncertain, businesses should: FEMA's potential dismantling would represent the biggest shift in American disaster management in generations. Businesses that fail to prepare for handling disasters without FEMA amidst a state-led disaster regime risk higher costs, legal headaches, and reputational damage. Disasters don't respect state lines, but the laws governing them increasingly do. For business leaders, understanding those legal boundaries might be the key to survival in a future where the federal safety net is no longer guaranteed.
Los Angeles Times
26 minutes ago
- Los Angeles Times
He was ‘trying to stay alive.' Family memorializes man who died in Camarillo immigration raid
Oxnard — In a ceremony that ended in tears and hugs, the family of Jaime Alanís Garcia said goodbye to the father of one who died after trying to escape from federal agents during an immigration raid at the Glass House Farms in Camarillo. Dozens of Alanís Garcia's family members, friends and community members attended the wake at the Camino del Sol Funeral Home in Oxnard. Family members remembered him as a joyful, hardworking man whose death came too soon. 'He was hiding, trying to stay alive,' said his niece, Yesenia Duran. 'He was loved by the community.' On July 10, federal immigration agents raided two cannabis greenhouse operations owned by Glass House Farms, setting off an intense, hours-long standoff between federal agents and protesters outside of the company's Camarillo site. More than 300 undocumented workers were detained, federal officials said, and protesters were injured after agents outside the property shot off tear gas canisters and less-lethal bullets. Alanís Garcia, 56, was fatally injured when he climbed atop a greenhouse and accidentally fell 30 feet while fleeing immigration agents at Glass House, his family said. He was taken to the Ventura County Medical Center, where he was put on life support. Duran announced his death on July 12. Mexican President Claudia Sheinbaum has weighed in, saying that the government would consider legal action against the U.S. after his death. 'This is unacceptable,' she said. The Department of Homeland Security has said that Alanís Garcia was not among those being pursued and that federal agents called in a medevac for him. Duran pushed back on that narrative, saying that they were waiting for more answers and witnesses into her uncle's death. 'It was a reckless raid,' she said, one that cost her uncle his life. On Monday, the body of Alanís Garcia rested in a brown casket with white trim, his head covered by a black beanie. His casket was surrounded by dozens of red roses, a hand drawn photo of him surrounded by monarch butterflies and a large arrangement of white flowers in the shape of a cross, a gift from his wife and daughter in Mexico. They are scheduled to soon receive his body, when he is returned to his native country. Isaac Alanis, 28, grew up living near Alanís Garcia, who was his mother's cousin, and came to see him as an uncle. Alanís Garcia would come over for dinner after work nearly every night, around 6 p.m., and he loved all kinds of foods, from menudo and pozole to Chinese food, which he would eat with a fork, because he didn't know how to use chopsticks, Alanis said. Before arriving at Glass House, Alanís Garcia spent 10 years working at a flower nursery, Alanis said. Sometimes, he said, he would join Alanís Garcia at the Oxnard Sunday flea market to walk around and pass the time. His uncle, he said, was an extrovert and was always laughing. 'He was joyful,' Alanis said as he fought back tears. On his phone, he had saved a 2020 video of his uncle dancing at a family gathering. On Monday, Alanis said he felt encouraged by the Mexican president's message, and it strengthened the family's resolve to get answers about the circumstances of his death, he said. He wore a shirt that depicted a photo of his uncle, and on the back, it read, 'justice for Jaime.' The mood was somber at the funeral home. Outside, a hand drawn photo of Alanís Garcia with wings sat among a box of pan dulces. Representatives from the Mexican government arrived and offered words of support and condolences to the family. The Mexican consular staff in Oxnard has said it would provide assistance to Alanis Garcia's family, offering to accompany them both in California and in his home state of Michoacán in central Mexico. A priest led the audience in a rosary service, calling out Hail Marys in Spanish as they prayed for Alanís Garcia and his relatives. The room was full, with many left standing, as they recited the prayer. Many wiped away tears. When it came time to bid a final farewell, family members held each other tightly as they cried into each other's arms. A guitarist serenaded the audience with songs, including one titled, Caminos de Michoacán, Roads of Michoacán, a ranchera song that pays homage to Alanis Garcia's homeland.
