The Vietnamese government said Sunday that they have discovered “dozens” of fake certificates of origin from Chinese companies who were trying to avoid U.S. tariffs by making it look like the Chinese products were “Made in Vietnam,” Bloomberg reported.
President Donald Trump recently raised tariffs on Chinese imports to 25 percent on $250 billion in Chinese goods after trade talks reached a months-long stalemate.
Vietnam pledged to increase fines and penalties for companies who make fraudulent trade claims. This includes fake certificates of origin and illegal transfers of products from other countries like China.
The Observer reported that U.S. Customs officials recently found Chinese plywood being shipped to the U.S. from Vietnam. For its part, Vietnam wants to avoid U.S. punishment that may come if they allow China to get away with mislabeling or illegally transferring products.
China Scrambling to Avoid Tariffs
Chinese fraud may be partly responsible for a recent dramatic surge in U.S. imports from Vietnam. Imports from Vietnam increased 40 percent in the first quarter of 2019, and at the same time imports from China decreased by 14 percent.
The new tariffs are bound to further affect these numbers, although analysts have said that the fraud only makes up a small percentage of the overall trade market. “There will always be leakages and workarounds to avoid tariffs, but we do not see it as a widespread phenomenon,” said Bloomberg Intelligence analyst Rahul Kapoor.
Trump has said he would increase tariffs on Chinese goods even more unless Chinese President Xi Jinping comes to the G20 Summit to participate in further trade negotiations.
“The China deal is going to work out. You know why? Because of tariffs,” Trump said in a CNBC interview on Monday. “[China is] going to make a deal because they’re going to have to make a deal.”
The threat may have had an impact — on Tuesday, Trump announced that he had spoken with Xi by telephone and that a meeting is set to take place at the G20 next week.
Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.
— Donald J. Trump (@realDonaldTrump) June 18, 2019
Tariffs as a Tool
Many Republicans oppose tariffs because, like taxes, they can negatively impact trade and lead to higher consumer prices on goods. Trump, however, has repeatedly imposed tariffs on China and other countries in order to renegotiate trade deals to level the playing field for the U.S.
It’s a policy that has largely been successful for Trump, who has long complained that other countries have been taking advantage of the U.S. by imposing higher tariffs on our goods. He renegotiated NAFTA last year after threatening tariffs, and just announced a new agreement with Mexico after threatening them with progressively higher tariffs unless they helped stop illegal immigration.
One of Trump’s strengths as a long-time businessman has been the ability to make a deal from which he benefits. Tariffs are one way to get other countries to the negotiating table, and Trump has shown he isn’t afraid to use them.
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