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Why enforcing tariffs on Chinese goods is harder than you might think

STEVE INSKEEP, HOST:

The tariff update. You'll recall that President Trump imposed tariffs on China, which President Biden has maintained and which President Trump now promises to extend to the whole world if he is sent back to office. Well, making sure that tariffs are enforced is harder than it looks. Keith Romer from NPR's Planet Money explains.

KEITH ROMER, BYLINE: American car parts manufacturer Plews & Edelmann was struggling. Profits were down. It had to lay off some workers. But then in 2018, the Trump administration imposed tariffs on, among other things, auto parts made in China.

DAVID RASHID: I thought, OK, now we're going to see, you know, a change.

ROMER: That's David Rashid, who helps run Plews & Edelmann. He says there was no change. Buyers from the big auto part stores told him, actually, the prices of his Chinese competitor - this company called Qingdao Sunsong - they were still low, despite the new rules.

RASHID: And so we were scratching our head. We're saying, hold on. Tariffs came in, and yet we're still not competitive? How does that work?

ROMER: When Rashid accessed import records, it looked like Sunsong's U.S. subsidiary had switched suppliers from Sunsong in China to a company in Thailand, which would mean they could legally import tariff-free. But Rashid didn't totally buy it. He had his team compare older Sunsong parts from China with the newer imports from Thailand.

RASHID: We could not see any difference. And, you know, I'm used to having two plants that are supposed to be making the same product. But in spite of our best efforts, it's hard to get it exactly the same.

ROMER: Rashid suspected the parts were still being made in China, just shipped via a Thai company to get around the tariffs. To try to prove it, he says he spent over a million dollars hiring forensic labs and even private investigators in Thailand. Now, in theory, this kind of trade investigation would be carried out by the government. But in practice, there just aren't enough cops on the tariff beat to police every shipment to the U.S. or to enforce possible violations.

RASHID: So we put it all together - the financial data, the trade data, the lab data - and we gave it to the Department of Justice. And six months later - five months later, they came back and told us that they declined to intervene.

ROMER: Rashid spent two years knocking on the doors of different government agencies, but nothing took until he managed to get members of Congress interested in his case. Finally, in January, federal officials raided Sunsong's U.S. facilities, looking for their own evidence. Sunsong did not respond to a request for comment, and no one in the federal government would speak on the record about the case. But David Rashid, he's hopeful.

RASHID: You know, when we got into this, I didn't anticipate this taking this long. But I can't give up.

ROMER: Maybe, he says, the government raid will be the first step towards legal consequences for his competitor and better days for his company.

RASHID: Yes, we've had layoffs, and yes, we've lost business. But we can rehire, and we can build back our business. And so I'm optimistic. I have to be.

ROMER: Optimistic that the tariffs will be enforced, at least in his company's case.

Keith Romer, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Keith Romer has been a contributing reporter for Planet Money since 2015. He has reported stories on risk-pooling among poker players, whether it's legal to write a spin-off of the children's book Goodnight Moon and the time one man cornered the American market in onions. Sometimes on the show, he sings.
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