During the first few weeks of Donald Trump’s U.S. presidency, tariffs have been threatened or levied on China, Canada, Mexico, and other countries. One key economic question is whether companies in these targeted countries will circumvent these tariffs by rerouting goods through third-party countries; this is typically done by shipping goods to an affiliate or separate business partner before exporting them to the final destination. This practice allows exporters from the targeted country to illegally avoid the higher taxes assigned to their goods by labeling them as originating from a non-targeted location.
The Costs of Circumventing Tariffs
