President Trump’s China tariffs are not just roiling the operations of Amazon sellers and other U.S. retailers big and small. They’re also upending the businesses of Chinese manufacturers and distributors supplying goods to the U.S. from the other side of the world.
Now, some of these suppliers are trying to keep their businesses humming by offering a simple—but illegal—solution to U.S. Amazon sellers: lying about the value of the Amazon merchandise you are importing to the U.S. in an effort to lower the duties you’ll have to pay under the new slate of tariffs.
Yes, that sounds a lot like customs fraud.
In emails and WeChat messages viewed by Fortune, around a half dozen Chinese suppliers proposed such illegal workarounds to executives from a mid-sized household goods brand with a large presence on Amazon.
“Many US companies use a lower value invoice to make customs clearance to reduce the tariff,” one supplier wrote to the U.S. brand. “You can think about it.”
“We can revise the declared value on commercial invoices to help duty costs,” another said.
Some also proposed another workaround called Delivery Duty Paid or DDP shipping. In this scenario, the supplier would handle getting the goods through customs, rather than the U.S. brand, and lie about the value of the shipment essentially on the brand’s behalf. The goal of this, at least in part, would be to create an artificial buffer between the U.S. seller and customs.
“Some have mentioned that they are doing this already for many of our competitors,” the founder of the household goods brand told Fortune. He requested anonymity to speak freely about the situation and to not burn long-time suppliers whose manufacturing he may still need. One of his suppliers said in a message viewed by Fortune that some China-based Amazon sellers use the same strategies to lower their custom bills.
The frenzied behind-the-scenes activity comes during a whirlwind week in which President Trump unleashed a tariff attack against countries across the world, before partially backtracking on some tariffs as the global economy threatened to collapse. But China is the exception, with most U.S. imports from the country now carrying a whopping 145% tariff. As a result, suppliers, retailers, and brands with supply chains linked to China are frenetically searching for solutions.
“I am worried for smaller importers that don’t understand the legal trouble they can get into by following their suppliers’ problematic advice,” the founder said.
In other messages viewed by Fortune, some suppliers are offering to lower their wholesale prices, but only moderately. Some also said they are considering building out manufacturing facilities in other non-U.S. countries with lower tariffs than China, but over time.
Many U.S.-based Amazon sellers have long complained to this reporter that they suspect some of their China-based rivals undervalue their imports as a cost-savings tactic. Then, this week, the issue exploded into public view across the Amazon seller community when a China-based consultant published a post about the current mindset of Chinese Amazon sellers, and stated that “the declared value of goods in a typical container from China to the U.S. usually ranges from $5,000 to $10,000.” Many U.S. Amazon sellers told Fortune that the number is unbelievably low, especially for the home and garden category, which includes furniture products, that the consultant operates in.
“They aren’t held accountable for customs fraud, and the tariffs will drastically increase their competitive advantage,” the U.S.-based household goods entrepreneur said of China-based rivals that intentionally mislead customs about the value of their imports.
