Is the US tariff too high? Chinese sellers are secretly using this trick!

Have you ever wondered why more and more Chinese goods enter the US market through "entrepôt trade"? Entrepôt trade for exports to the US, this seemingly complex business model, is becoming a secret weapon for many enterprises to avoid high tariffs and expand overseas markets. This article will lift the veil of mystery of this form of trade and take you to understand its operation logic, advantages and potential risks.

Simply put, entrepôt trade means that goods are first exported from the producing country (such as China) to a third country (such as Vietnam or Malaysia), and after simple processing or labeling, they are then exported to the target market (such as the US) in the name of the origin of the third country. This method can effectively avoid the high tariffs imposed by the US on Chinese goods, especially for sensitive categories such as textiles and electronic components.

• Operation process: Export from China → Transit through a third country → Import to the US
• Core value: Reduce tariff costs and avoid trade barriers
• Typical transit countries: Vietnam, Thailand, Mexico, etc.

Mr. Zhang is the person in charge of a Shenzhen electronic parts factory. He calculated an account: If directly exporting to the US, 25% tariffs need to be paid, while through transshipment in Vietnam, only 7% is required. The transit cost (logistics + processing) accounts for about 8% of the goods value, and ultimately still saves 10% of the cost. In addition, entrepôt trade can also:

• Avoid origin certification review
• Shorten the supply chain response time
• Diversify the single market risk

Ms. Li's clothing foreign trade company once had its goods detained by the US customs due to flaws in the documents of the transit country, with losses exceeding $200,000. Entrepôt trade must strictly comply with three rules:

• The transit country needs to complete substantial processing (such as changing the tariff number)
• The logistics documents and the capital flow must match
• The transit country needs to have a preferential trade agreement with the US

Trade experts from Zhongshitong suggest that the proportion of transit processing should be ≥ 35%, and a complete production evidence chain should be retained.

Entrepôt trade is like a double-edged sword. If used well, it can capture the market, but if used poorly, it may harm oneself. In today's reshaping of the global trade pattern, do you choose to continue watching, or take the initiative to understand the rules and optimize the supply chain? Welcome to share your insights in the comment section, or send a private message to obtain the Compliant Operation Manual for Transit Countries.