A record $112 billion gap between China’s reported exports to the United States and what US customs recorded as imports is fueling concerns of large-scale tariff evasion. Industry experts warn that suspicious shipping offers, phantom importers, and questionable customs practices may be undermining tariff enforcement introduced during the presidency of Donald Trump.

What Is the $112 Billion Cargo Gap?

Trade data indicates:

China reports significantly higher exports to the US than the US reports as imports
The discrepancy reached a record $112 billion last year
The gap is far larger than during earlier trade tensions

Analysts suggest that while reporting differences and tax rebate policies may explain part of the mismatch, a substantial portion could stem from tariff evasion practices.

How the Alleged Evasion Works

Industry insiders describe several methods allegedly being used:

1. Suspicious Low-Cost Shipping Offers

US businesses report receiving WhatsApp messages and emails advertising:

China-to-US shipping at $0.70 per kilogram
“Taxes included” pricing
40%–50% cost reductions through “shared tariff risk”

Since tariffs are based on product value — not weight — such offers raise red flags.

2. Delivered Duty Paid (DDP) Misuse

Under Delivered Duty Paid (DDP) arrangements:

The overseas seller handles customs clearance
Duties are paid on behalf of the buyer

While DDP is legal, fraud can occur if goods are:

Undervalued
Misclassified
Routed through shell companies

3. Phantom Importers & Shell Companies

Investigators often encounter:

Non-resident importers acting as importer of record
Fake addresses
Companies dissolved before enforcement action

Former customs officials say this structure makes enforcement complex and time-consuming.

Business Impact: Uneven Playing Field

Michael Kersey, president of American Lawn Mower Company, says compliant firms have paid duties of up to 45% on Chinese imports. Companies that evade tariffs gain:

10%–20% retail pricing advantage
Market share gains
Competitive leverage over law-abiding businesses

Logistics executives, trade lawyers, and industry groups warn that this dynamic weakens the intended impact of US trade policy.

Ryan Petersen, CEO of Flexport, described ultra-cheap shipping offers as strong indicators of fraud.

Government Response

The Trump administration launched:

A 2025 trade fraud task force
A whistleblower program
Expanded AI monitoring of supply chains

However, enforcement challenges remain, especially when dealing with foreign shell entities beyond US jurisdiction.

Proposed reforms under discussion include:

Higher financial requirements for foreign importers
Revisions to the “first sale” valuation rule

Legislative progress has been limited so far.

Key Entities

United States – Importing country
China – Exporting country
Donald Trump – Introduced tariff policies
Flexport – Logistics firm raising fraud concerns

Final Verdict

The $112 billion trade discrepancy highlights mounting concerns that tariff evasion may be diluting the effectiveness of US trade policy. While some reporting gaps are routine in global commerce, the current scale suggests systemic irregularities.

If enforcement fails to keep pace, compliant American businesses could face sustained competitive disadvantages — undermining the very protection tariffs were designed to provide. Strengthening customs oversight without overburdening legitimate firms will be critical to restoring balance in US–China trade enforcement.