Call it the Tijuana two-step: How Chinese goods dodge American tariffs
Trucks at Otay Mesa crossing offload Chinese goods to avoid tariffs by dividing them into small packages in Tijuana warehouses. Policymakers are challenged to address this loophole, questioning tariff effectiveness.
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Trucks at the Otay Mesa crossing between California and Tijuana are offloading Chinese goods into warehouses just south of the border, where they are divided into small packages and driven back to America, avoiding tariffs. This practice, known as the "Tijuana two-step," allows Chinese imports to enter the U.S. without paying tariffs. Policymakers are facing challenges in addressing this loophole. The maneuver raises questions about the effectiveness of American tariffs on Chinese goods and highlights the complexities of international trade regulations. The situation underscores the need for policymakers to find solutions to prevent such circumvention of tariffs and ensure fair trade practices.
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3 commentsCalling out Mexico but ignoring Vietnam is kinda dumb, especially because tariff evasion by labeling Chinese goods as Vietnamese is way more common than the Mexican route because of the China-ASEAN FTA.
Secondly, Mexico has re-instated tariffs reaching 50% on Chinese goods recently, so it's not a scalable route [0][1]
Furthermore, Section 321 only applies to small goods (ie. The kinds of FMCGs you find on Temu or Shien) which were never on the radar for tariffs because there's no point [2], and you can't de minimis your way into building a car or steel.
In addition, I also think this article is ignoring the larger goal of tariffs - indirect costs like co-mingling and building new supply chains to minimize tariffs are expensive, and drastically reduce margins. Subsidizes only go so far, and at some point it's just burning money.
[0] - https://www.whitecase.com/insight-alert/mexico-reinstates-ta...
[1] - https://www.bloomberg.com/news/articles/2024-04-30/mexico-ta...
[2] - https://www.barrons.com/articles/shein-temu-china-tariffs-26...
Biggest culprit, Amazon.
Tariffs on small goods are not generally the point, and measures like this are actually achieving the goal of tariffs-inserting friction in the supply chain, encouraging alternative opportunities without destroying domestic supply / sales segments.
Measures like this will only be economically viable until automation levels the playing field, and an automation heavy economy is exactly the goal for US local manufacturing. We aren’t interested in setting up thousands of sweatshops so we can compete with fast fashion from China. We’re not trying to become the world’s leading source of counterfeit electronic components or fake fashion goods, and tariffs aren’t meant to be sanctions.
This “one weird trick” exists because it’s irrelevant to the goal of tariffs. The article has “those devilish, tricky Chinese” vibes and misses the relevant points entirely. Disappoint.
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