Trump Is Unable to Collect Tariffs

The New York Times today carried a fascinating story about how to avoid paying tariffs. It involves Trump's self delusion that he is negotiating "deals." While no doubt there are a few people prosecuted for not paying tariff duties the article says the volume of goods coming into the U.S. paying no or little of the legally required fees is growing rapidly. Those who pay the tariffs and try to raise their prices are being hurt and demanding justice. This justice borders on the impossible to deliver.

Some Chinese firms are now advertising "low duty prices" or "all duties paid prices" to U.S. buyers. There are two and maybe more ways to pay less or nothing. Trump's "deals" include small countries who say to him, "Look, you are the most powerful man, and the smartest, on earth. We defer to you. We will charge no tariffs on U.S. goods imported into our country. All we ask is that you charge to lowest possible tariff when we ship to the U.S." Trump says, "OK, no tariffs on U.S. goods going to you. I'll charge you only 2%. Done deal."  Trump concludes he is brilliant and has out-negotiated the small country. Chinese companies then label the origin of their goods as that small country, perhaps pay it a tiny fee and pay the U.S. tiny amounts of tariff duties. It appears they are better off than they were under Biden and Obama.

Another way is to mislabel the contents of a container. Opening containers is time consuming and beyond the budgets of federal departments. Some goods are charged less than others so containers are falsely labeled as low tariff goods.

Trump has said he is cracking down on trade crime but whether he understands or cares about enforcing tariffs is anyone's guess. From what we can see, he is out maneuvered and out smarted by leaders around the world.