Tariff Avoidance Tactics: Lessons from US-China Trade War

This CEPR research examines tariff avoidance behaviors and measurement challenges that emerged during the initial US-China trade war, offering critical insights for supply chain professionals navigating protectionist environments. The analysis reveals how companies restructured sourcing, rerouted shipments through third countries, and employed valuation strategies to minimize tariff exposure, tactics that created opacity in trade data and complicated customs enforcement. For supply chain leaders, these findings highlight the structural vulnerabilities in global trade architecture when tariff regimes shift rapidly.

Companies that successfully managed tariff exposure did so through supply chain diversification, alternative sourcing geographies, and sophisticated customs compliance strategies. The research underscores that tariff avoidance is not merely a cost optimization exercise; it reshapes trade flows, creates supply chain fragmentation, and introduces measurement errors that complicate demand forecasting and inventory planning. As geopolitical tensions and protectionist policies persist globally, understanding these avoidance mechanisms and their second-order effects becomes essential for operational resilience.

Supply chain teams must anticipate that future tariff regimes will trigger similar behavioral responses, requiring scenario planning that accounts for sourcing volatility, route unpredictability, and increased compliance complexity.