China’s $112-B Cargo Gap Points to Massive U.S. Tariff Evasion

Messages arrive via WhatsApp and email promising a deal that seems too good to be legal: a way to move goods from China to the U.S. while avoiding President Donald Trump’s tariffs.

Michael Kersey, president of the American Lawn Mower Company, is among a dozen business owners, shipping merchants, trade attorneys, and former customs officials who are sounding the alarm over apparent tariff fraud surging to record proportions. (Photo: American Lawn Mower)

For Michael Kersey, president of the American Lawn Mower Company, these solicitations represent an existential threat.

His century-old firm, famous for its push-reel mowers and gardening shovels, plays by the rules, Laura Curtis and James Mayger reported for Bloomberg News.

His competitors, he suspects, are somehow bypassing steep trade barriers that Trump is seeking to maintain even after the Supreme Court (SC) ruled many of them illegal.

“Tariff cheating is much, much worse than tariffs for us,” said Kersey, who began outsourcing production to China two decades ago and paid as much as 45% to bring those goods into the U.S. over the last year.

“The tariffs are just the cost of doing business, but the tariff cheats are the ones that are very, very damaging.”

Kersey is among a dozen business owners, shipping merchants, trade attorneys and former customs officials who told Bloomberg News they are sounding the alarm over apparent tariff fraud surging to record proportions.

Fueled by aggressive Chinese logistics tactics and the highest duties in a century, the suspected evasion is blunting Trump’s trade agenda while penalizing compliant companies.

The scale of the problem is staggering.

Trade data released showed a record $112 billion gap between what China reported exporting to the U.S. and what U.S. Customs said actually arrived last year.

Put simply, the discrepancy suggests that as much as a quarter of what Asia’s largest economy shipped to American shores last year slipped under the tariff radar.

While tariff dodging has frustrated the U.S. government for years, the current discrepancy dwarfs the anomalies seen during Trump’s first term.

Federal Reserve research at the time found that nearly two-thirds of such gaps stemmed from tariff evasion, although other factors, such as China’s tax rebate policy, also contributed to misreporting.

The widening gulf since Trump’s first trade war suggests that steeper duties have spawned an underground economy of shipping schemes designed to circumvent tariffs.

Such tactics raise doubts about whether his signature economic policy can deliver on his promise to revive American manufacturing.