Trump's China tariff plan has $64 bn hole

Goods worth billions escape taxes due to undercounting of imports

President-elect Donald Trump has promised to impose 10 percent tariffs on all imports from China as soon as he takes office next month. But that might be difficult to achieve fully because tens of billions of dollars worth of goods will probably escape those import taxes due to loopholes and undercounting of how much is actually arriving from China.

In recent years, some experts have pointed out a widening gap between US and Chinese trade data that they believe is driven by three factors: the "de minimis" tariff loophole, an underreporting of the value of imports by US importers eager to reduce the cost of tariffs and over-reporting by Chinese exporters eager to maximize tax rebates.

The anomaly has appeared in global trade data from early 2020, when China started to say it was selling more goods to the US than America reported buying from the Asian manufacturing behemoth. The gap has grown steadily since and at $64 billion in the first 10 months of this year, it's on track to exceed the record set last year.

The upshot: Not only will tens of billions of dollars worth of shipments likely avoid Trump's tariffs, but the US data also downplays just how dependent US businesses and consumers remain on trade with China.