- Some Chinese exporters are trying to avoid tariffs by saying their products are made in different countries.
- This is done by creating false country of origin labels, experts told Business Insider.
- Unless value is added to a product in the third country, it's illegal to adopt a new place of origin.
South Korea, Thailand, and Vietnam are cracking down on methods used by Chinese exporters to avoid President Donald Trump's high tariffs.
A growing tactic used by some Chinese exporters is to ship products through neighbouring countries to falsely claim the goods are not Chinese and avoid tariffs of up to 145% in place on Chinese goods imported to the US.
Jaya Wen, a professor in the Business, Government, and the International Economy Unit at Harvard Business School, told Business Insider that if goods undergo a "substantial transformation" in the intermediate country, they merit a change in their place of origin.
Wen, who researches trade re-routing, said value-added production has increased since tariffs were introduced and is a legitimate method for Chinese companies to avoid tariffs.
But illegal rerouting and relabeling through a third country, where no value is added to products, also appears to be taking place, she said.
In this strategy, firms take finished products, ship them to Vietnam, for example, and re-label them from "Made in China" to "Made in Vietnam." This was happening before the current wave of tariffs, she said.
The White House's senior trade advisor, Peter Navarro, raised concerns about this process in an interview with CNBC in April, saying that Chinese businesses were "trans-shipping to Vietnam to evade tariffs."
In April, South Korea's customs agency said that it had seized over $20 million worth of products with falsified countries of origin in the first quarter of 2025, local news outlet The Korea Times reported. The majority of products were destined for the US.
"We are seeing a sharp increase in recent cases where our country is used as a bypass for products to avoid different tariffs and restrictions because of the US government's trade policy changes," the agency said in a press briefing, according to Reuters.
The agency's commissioner, Ko Kwang-hyo, said there were "numerous cases where the origins of Chinese products were falsified as Korean," The Korea Times reported.
Korea's Customs Agency said it would launch a special investigation unit to crack down on the practice, and would enhance intelligence sharing with US Customs and Border Protection (CBP).
Similar crackdowns on counterfeit product labelling are taking place in Thailand and Vietnam,
Three directives issued in March and April by Vietnam's Ministry of Industry and Trade urged trade agencies to monitor and tighten controls around place of origin fraud to protect the reputation of Vietnamese goods.
Thailand's Department of Foreign Trade is taking over all approvals for Certificates of Origin (C/Os) for US-bound exports and has expanded a watchlist of high-risk products, local outlet Nation Thailand reported.
US authorities determine the underlying place of origin through a "highly fact-specific analysis that needs to be done at a detailed level," said Mark Segrist, a partner at the import and export trade law firm Sandler, Travis & Rosenberg.
If US Customs and Border Protection begins to question legitimate country-of-origin shipments coming out of third countries based on fears that the goods may be Chinese, this could put shipments from those countries at risk of much higher scrutiny, Segrist told BI.
That could lead to increased detentions, additional delays, and increased costs for US importers, he said.
Asian countries are also cracking down in an effort to prevent further sanctions, negotiate lower tariffs on their own imports, and secure trade deals with the US, both experts told BI.
Thailand and Vietnam have become manufacturing hot spots for many multinational companies diversifying their operations outside China. Heightened surveillance of illegal re-labelling would also help boost local manufacturers, Wen said.
