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Vietnam Says Some Chinese Exporters Are Using Fake ‘Made-In-Vietnam’ Labels To Avoid US Tariffs

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Some Chinese exporters are putting fake “Made in Vietnam” stickers to try to avoid the U.S. tariffs, Vietnam alleged on Sunday.

Vietnam said in a government statement that it had found dozens of cases in which Chinese exports, including textiles, iron, steel and aluminum, were being illegally transferred to Vietnam where fake stickers were then placed so that China can skirt the recent tariffs imposed by the U.S.

Vietnam also stated that it was planning to increase the penalties on trade fraud and developing an inspection process for goods that are at particular risk.

U.S. customs officials have uncovered Chinese plywood shipped to America through a Vietnamese company with “Made in Vietnam” stickers, according to the statement.

These shipments are “relatively small” when compared to China’s overall exports, Bloomberg reported.

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“A cottage industry for circumventing U.S. tariffs will likely bloom, given the high tariff rates and huge potential profit,” said Chua Hak Bin, a senior economist at Maybank Kim Eng Research Pte. in Singapore, according to Bloomberg.

Goods on China now incur a 25 percent tariff. The U.S. raised the tariffs from 10 percent to 25 percent in May, which equals about $200 billion on Chinese goods.

Beijing then increased tariffs on $60 billion worth of U.S. goods.

This followed a short truce between U.S. and China during which they agreed not to implement any new tariffs.

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Vietnam was recently put onto a currency manipulation watchlist last month by the U.S. Treasury Department, and Do Van Sinh, a standing member of the National Assembly’s economic committee, said in the government statement that Vietnam was worried that the U.S. may punish it because of incorrectly labeled Chinese goods that have entered America.

Vietnam pushed back on being added to the watchlist, saying that the exchange rate wouldn’t create an unfair advantage in trade.

Deputy Prime Minister Pham Binh Minh said that gross domestic product may even decrease by $256 million over the next five years, Bloomberg reported.

China’s shipments to the U.S. this year have decreased, and Vietnam’s shipments have shown a big increase.

This could be due to changing supply chains, but some believe that much of the apparent increase may be fraudulent, according to Bloomberg.

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