00:00 Speaker A
The number of Chinese imports entering the United States significantly lower compared to a year ago, Chinese goods are still arriving in the States via other Asian nations. For more let's welcome in Yahoo Finance's Rick Newman. I mean, this has been sort of long standing practice, right? A ways for China to try and get around existing tariffs. So what do we know about what's happening now?
00:25 Rick Newman
Well, it's only long standing when Donald Trump is the US president imposing tariffs. Uh but yeah, it's a pattern we saw in 2018 and 2019. Uh this is known as transshipment in uh in trading lingo. Um and basically it could mean one or one of two or three different things. So first of all, uh when the tariff when there's a big tariff differential between countries right now. So the the tariff on Chinese imports is 30%. That's the new tariff added this year. And the new tariff on everybody else is just 10%. So if you're a Chinese company and you can first ship your products to another country, such as Vietnam or Cambodia, and then ship them to the United States, uh you're going to the country of origin then is Vietnam or Cambodia and the tariff is 10% rather than 30%. And that's a big difference. Uh if you're if you're a if you're an importer or an exporter, that 20% differential is a big deal. Uh so um that is reason for companies to do that. The other thing that's been happening since Trump's first term is Chinese companies have been diversifying out of China. So most of the companies that produce stuff in Cambodia, as one example, that comes to United States, most of those companies are actually owned by Chinese firms. Um so uh Chinese producers themselves are diversifying outside of China. And now we're seeing this playing out in the trade war, and a lot of people predicted this. So fewer imports coming from China, but a big jump in imports coming from those neighboring countries.
02:56 Speaker A
So what's Trump's response going to be to all this, Rick?
03:03 Rick Newman
Well, uh he and his trade advisors are aware of this trick. Um the part of the purpose, I think, of the so-called reciprocal tariffs, uh those are the tariffs that Trump announced on April 2, but then he suspended them on April 9. And uh those could go back into effect uh at the new deadline of July 9th. But those tariffs were higher on some other Asian countries than on China. Higher on Vietnam and Cambodia, for example, than they were on China. I think in part because they realized what happened the first time around with the Trump trade war was a lot of the goods just came into United States via a third party country. Now what Trump's trying to do is make trade deals country by country. Uh Vietnam has actually been very receptive to that. They seem to be looking for any way they can to avoid a higher tariff. But this is um import, export, whack-a-mole, guys. I mean, this is this is what happens when you create these um weird distortions in uh global trading markets. These companies are very clever. They have a strong motive to to ship goods at the lowest possible cost, and they are moving stuff around all over the place.
05:07 Speaker A
All right. Thank you, Rick. Appreciate it.
05:11 Rick Newman
Bye, guys.
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