Catenaa, Thursday, October 29, 2026– A UBS study finds that about 50% of the value of China’s exports to the US may be reported as coming from other markets to avoid Trump tariffs.
UBS researchers found discrepancies in how certain Chinese products are identified in US import records, raising the possibility that differences in customs classifications are helping importers reduce their tariff costs.
“This suggests US importers are paying a lower effective tariff rate,” UBS said.
According to UBS, such trading practices could help explain why higher US tariffs have had a smaller impact on consumer prices and economic activity than initially anticipated. The findings also indicate that the benefits of future tariff reductions could be more limited than expected.
“These data anomalies have increased significantly since March 2025. There is a compelling case that they represent US importers’ attempts to minimize paying tariffs on goods that originally came from China, and that this is taking place on an economically significant scale.” UBS said.
The study also found that from 2019, the value of China’s exports to the US exceeds what the US claims to be buying from China.
UBS said that after adjusting for transport and insurance costs, about half the goods China sells to the US appear to be going missing before they reach US shores.
“As large numbers of cargo ships are not sinking in the Pacific, the most likely explanation is that US importers are being creative in where they say they are buying things from,” UBS said, suggesting that something from China actually comes from Vietnam lowers the tariff that the US importer has to pay.
UBS said that this ultimately limits the inflation impact for the US consumer—but of course also reduces the tax revenue accruing from the tariff.
Other explanations, according to UBS, are that companies in China are deliberately inflating export values for tax credits, for instance, are not especially plausible.
UBS said that four product groups account for over two-thirds of this anomaly: Fabrics and textiles, Machinery and equipment, Electrical equipment, and Furniture
