Marketplace®

Daily business news and economic stories

Tariffs can tempt exporters to lowball the value of their products

And Whirlpool is reportedly accusing some of its overseas competitors of doing exactly that.

Download
“If you're not selling it for anything different in this country than you were beforehand, then that's fraud,” said Alexander Breckinridge, a trade compliance lawyer at Jones Walker.
“If you're not selling it for anything different in this country than you were beforehand, then that's fraud,” said Alexander Breckinridge, a trade compliance lawyer at Jones Walker.
Scott Olson/Getty Images

The U.S. appliance maker Whirlpool is accusing several of its overseas rivals of evading tariffs. 

Whirlpool reportedly told the Trump administration that it suspects companies including Samsung, LG, and Haier — which owns GE Appliances — are declaring artificially low values on their imported goods in customs paperwork in order to pay less in import taxes. 

Whirlpool points to federal data that shows the declared value of appliances including gas ranges, washing machines, and garbage disposals dropping significantly over the summer. 

The company’s facing tariff pressures of its own because of the import taxes on steel and aluminum that it uses. It hasn’t filed a formal complaint yet.

In general, higher tariffs provide a bigger incentive for the form of evasion called “undervaluation.”

There are non-fraudulent reasons a foreign exporter might lower the value of its goods in the face of higher tariffs said Bernard Yaros, at Oxford Economics. Companies could just be pricing their goods lower and taking a smaller profit.

“They are eating the cost, so to speak, of these tariffs to remain competitive,” Yaros said.

Data from the Bureau of labor statistics on the price of imports in recent months, suggest this may be happening in some cases: values have fallen for some Chinese computers, apparel, and European wines and spirits.

But that’s not what Whirlpool is accusing its competitors of doing said Alexander Breckinridge, a trade compliance lawyer at Jones Walker.

“The difference is actually lying about the value of what you have produced before it's imported,” Breckinridge said.

That’s a particular risk when one company is doing both the exporting and the importing.

“If you're not selling it for anything different in this country than you were beforehand, then that's fraud,” Breckinridge said.

The Department of Justice has launched a cross-agency task force to step up tariff enforcement, but Mary Lovely at the Peterson Institute for International Economics said responding quickly is going to be tough.

“There's an enormous enforcement challenge, given just the scale of what President Trump has done so Customs and Border Patrol has got firefights everywhere,” Lovely said.

On top of that — a lot of customs reporting is still done on paper.

Related Topics

Latest Episodes

View All Shows
  • Marketplace
    3 hours ago
    25:19
  • Make Me Smart
    9 hours ago
    19:00
  • Marketplace Morning Report
    11 hours ago
    6:55
  • Marketplace Tech
    16 hours ago
    8:33
  • This Is Uncomfortable
    3 days ago
    56:05
  • Million Bazillion
    24 days ago
    32:45