Companies decide exactly how they're going to cheat on their taxes based on how complicated their products are.
SSRN · March 18, 2026 · 6429415
The Takeaway
During the US-China trade war, firms didn't just evade tariffs; they optimized their crimes. Importers of simple goods (like raw materials) used 'transshipment' through third countries, while importers of complex goods (like electronics) resorted to lying about the value of the products to avoid the hassle of rerouting supply chains.
From the abstract
We study how tariff-induced incentives reshape evasion behavior across traded products during the 2018–2019 US-China trade war. Using an imputation-based staggered difference-in-differences estimator applied to disaggregated monthly HS 8-digit trade data, we capture short-run evasion dynamics that standard annual HS 6-digit analyses obscure. We find an average 20% increase in evasion during the trade war, with substantial heterogeneity across products. Crucially, indirect transshipment and direc