CDZ Can Chinese Avoid Tariff by Rerouting their products through a third country?

Discussion in 'Clean Debate Zone' started by grbb, Sep 9, 2018.

  1. grbb
    Offline

    grbb VIP Member

    Joined:
    Oct 15, 2016
    Messages:
    588
    Thanks Received:
    42
    Trophy Points:
    68
    Ratings:
    +158
    A chinaman is producing porcelain, paper, and gun powda.

    I am making this up here. Just for sample.

    Donald Trump is like, 1000% tariff on all porcelain from China.

    Mr. Ching Chong then sell porcelain to Harambe in Mexico, that then sell it to Jim Smith in Texas.

    Problem solved.

    0% Tariff.

    If anything, the only thing Donald Trump did is giving money to traders.
     
  2. candycorn
    Offline

    candycorn Alis volat propriis

    Joined:
    Aug 25, 2009
    Messages:
    46,707
    Thanks Received:
    5,508
    Trophy Points:
    1,830
    Ratings:
    +17,955
    It likely isn't that easy. What will happen though is that stuff produced in countries we target will sell their goods to other markets.

    They can sell it to Jacques in France. They make it for $30 and sell it to Jacques in France. Jacques pays $50 for a widget. He sells it for $90.
    They can sell it to Jack in Florida. They make it for $30 and sells it to Jack in Florida. Jack pays $60 for the same widget. He sells it For $105.
     
    • Funny Funny x 1
  3. Toronado3800
    Offline

    Toronado3800 VIP Member

    Joined:
    Nov 15, 2009
    Messages:
    5,913
    Thanks Received:
    437
    Trophy Points:
    85
    Ratings:
    +1,184
    This guy is right.

    They'll be small cases of it for sure but to ship something through a third party to avoid a tariff is asking for a lot of efficiency on the third party's part. Not to mention a bunch of idiocracy on the importer's part.

    .....although you know, we have a habit of letting companies import illegal aliens for their financial benefit to the detriment of Uncle Sam.
     
    • Thank You! Thank You! x 1
  4. MarathonMike
    Offline

    MarathonMike Platinum Member

    Joined:
    Dec 30, 2014
    Messages:
    9,947
    Thanks Received:
    3,078
    Trophy Points:
    390
    Location:
    The Southwestern Desert
    Ratings:
    +17,979
    Adding a middleman always adds costs and complication, nothing is for free.
     
    • Thank You! Thank You! x 1
  5. grbb
    Offline

    grbb VIP Member

    Joined:
    Oct 15, 2016
    Messages:
    588
    Thanks Received:
    42
    Trophy Points:
    68
    Ratings:
    +158
    That "third" party can be a puppet company.
     
    • Funny Funny x 1
    • Informative Informative x 1
  6. Flopper
    Offline

    Flopper Gold Member

    Joined:
    Mar 23, 2010
    Messages:
    19,410
    Thanks Received:
    3,414
    Trophy Points:
    280
    Location:
    Washington
    Ratings:
    +7,909
    Many large US importers will see minimum impacts of larger tariffs by order shifting which is completely legal.

    For example, a large textile company with plants in in a number of countries with very low labor costs and very low import tariffs including China India, Turkey, and Pakistan shifts orders between plants as needed. Now the US puts a larger tariff on goods from China. The distributor then switches orders. Pushing orders bound for the US to India, Pakistan, and Turkey. Orders normally routed to these countries are routed to China. All plants are getting the same amount of work and the Trump tariffs are having little if any effect. This is just one of many ways of bypassing or reducing tariffs.

    Unfortunately small importers do not have that option and they are the ones that get hurt the most.
     
    Last edited: Sep 13, 2018
  7. candycorn
    Offline

    candycorn Alis volat propriis

    Joined:
    Aug 25, 2009
    Messages:
    46,707
    Thanks Received:
    5,508
    Trophy Points:
    1,830
    Ratings:
    +17,955
    Additionally, the retaliatory tariffs on American products force people who used to eat our food, use our products, and possibly were curious about what else Firestone or Hersey Chocolate offered are now using Yokohama tires and Nestle chocolate and don't even consider the inflated prices they'd have to pay for American products.
     
    • Agree Agree x 1
  8. Flopper
    Offline

    Flopper Gold Member

    Joined:
    Mar 23, 2010
    Messages:
    19,410
    Thanks Received:
    3,414
    Trophy Points:
    280
    Location:
    Washington
    Ratings:
    +7,909
    You're right it is not that easy. The rate an importer pays in duties depends on the point of origin. Just shipping a washing machine made in China to New Zealand and then to the US does not change the point of origin which is what tariff rates are based on not from where it was shipped.

    The actually rules that determine point of origin are very complex and based on where most of the product was built. So if a washing machine was built in China and shipped to Pakistan then just re-shipped to the US, the point of origin and thus the duty would not change.

    However, suppose the Chinese manufacturer who buys components from all over the world only shipped the frame without panels, name plate, instructions, warranty, etc to a manufacturer in Pakistan. What is the country of origin? Well that depend how much market value was added by various countries. In real life, the Pakistan company will label the shipment's place of origin as Pakistan and ship it to the US. It will then be taxed at the Pakistan rate which is zero, not the Chinese rate. If there is a question of point of origin it will be the importer's problem, not the manufacturer. In reality, that rarely happens.

    The forgoing is why economists say tariffs do no protect jobs. They do increase cost to consumers, decrease US exports which do reduce jobs, and create an environment of political corruption in which government determines which industries are favored and which are not.
     
    • Agree Agree x 1
    • Informative Informative x 1
    Last edited: Sep 13, 2018
  9. Toro
    Offline

    Toro Diamond Member

    Joined:
    Sep 29, 2005
    Messages:
    68,938
    Thanks Received:
    13,698
    Trophy Points:
    2,180
    Location:
    Surfing the Oceans of Liquidity
    Ratings:
    +50,453
    Yes, to some extent. Chinese companies are already shifting production to Vietnam and Bangladesh.
     
    • Thank You! Thank You! x 1
  10. Flopper
    Offline

    Flopper Gold Member

    Joined:
    Mar 23, 2010
    Messages:
    19,410
    Thanks Received:
    3,414
    Trophy Points:
    280
    Location:
    Washington
    Ratings:
    +7,909
    For multinationals, it's often just a different division of same organization.
     

Share This Page

Search tags for this page

china rerouting of goods through third countries