With the huge differences in per-country tariff, there seems to be a large incentive to reroute and relabel imports. E.g., build a bike frame in China, export it to a sister company in Japan, and export it to the US from there, claiming production in Japan. How effective are existing controls against that? (And what are they even, I'm ignorant.)
I assume that if it’s done at scale it will change trade balance and middlemen country will see their import taxes rise. It actually creates self interest for countries to prevent this behavior and block such activity as it will hurt genuine export.
It's trivial to get around these rules. Northern Irelnd is (or was at some point) a country of origin for both the EU and the UK. So a company could produce something in Greece, ship it to Dublin within the EU, then truck it to Belfast in Northern Ireland, and export it to the US with a UK certificate of origin.
There are import/export costs that make such routing impractical other than for smaller volume, high cost items.
The other thing is that customers buying high end items care about where it was made, so you need to inform them. (Passing off the bikes as being manufactured in Japan but in fact the frame was made in China, would be a big blunder.)
If people find hacks around the rules, they will use them if cost effective. I'm reminded of a train that used to shuffle freight a few hundred meters in order to qualify the goods for cheaper 'shipped by rail' taxes. But I can't find the article :-(
You forgot the part about going from China to Japan and the associated costs.
It could be cheaper? Could also be more expensive as well.
In any case, if too many people play that game, then it only raises the tariff on Japan. I wouldn't assume these tariffs are fixed. They seem to be tied to trade deficit. So..
yeah.
No real way around them over time.
Might even piss the US government off if you try that. Which is kind of like playing with fire right now. It's not clear to me that this administration believes in rule of law in the strict sense that everyone adhered to in the past.
This assumes the difference in tariff stays consistent while you are setting up your multinational supply chain. The truth is that nobody has any idea what Trump will say tomorrow, never mind next quarter.
When I read this I wonder if everything is a negotiating tactic:
"Trading partners have repeatedly blocked multilateral and plurilateral solutions, including in the context of new rounds of tariff negotiations and efforts to discipline non-tariff barriers."
