How Businesses & Sellers Avoid Paying Tariffs
Did you know that many of the biggest businesses don’t pay tariffs? While small and mid-sized companies struggle with high import duties, major players often exploit loopholes to sidestep these costs.
In this article, we’ll explore three common (and often illegal) ways that big sellers and businesses avoid paying tariffs when importing goods into the United States and selling them on Amazon.
Amazon has become a haven for sellers from all over the world, particularly China, who can bypass traditional retail gatekeepers like Walmart and Costco. With fewer restrictions and little oversight, many foreign sellers take advantage of the system, leaving American businesses at a distinct disadvantage.
1. Under-Declaring Goods
One of the most common methods for avoiding tariffs is under-declaring the value of goods.
For example, consider a set of exercise ropes that cost around $10 per unit when purchased from a Chinese supplier. If imported legally, the base duty of 8% would amount to $0.80 per unit. However, with additional tariffs imposed by the Trump administration (25% in 2016) and later increased (another 20% in 2025), the total tariff reaches 53%, or $5.30 per unit.
However, the U.S. Customs and Border Protection (CBP) primarily operates on an honesty system. Sellers simply declare the value of their goods, and in many cases, their word is taken at face value. To exploit this, sellers report a much lower value—say, $3.50 instead of $10—drastically reducing their tariff payments.
While this practice is illegal and punishable by fines or even imprisonment, foreign sellers face almost no real consequences. Unlike an American business that could be fined, audited, or shut down, sellers based in China can simply open new Amazon accounts under different names if caught.
2. Moving Goods Through Another Country
Another common tactic is shipping goods through a third country to disguise their origin.
Tariffs are based on the country of origin, meaning products made in China are subject to high duties, while products from other countries—such as Vietnam, Taiwan, or Mexico—face significantly lower or no duties at all.
However, it’s relatively easy to manipulate these labels. Some businesses ship their products from China to another country, repackage them with new labels, and then send them to the U.S. as if they originated from the new country. Since China shares borders with countries that have weaker regulations and corruption-prone customs officers, it's not hard to see how this scheme works.
This practice allows sellers to avoid hefty tariffs while CBP struggles to enforce compliance.
3. Misclassifying Items
The third way businesses dodge tariffs is by misclassifying their products.
Every imported product is assigned a classification code under the Harmonized Tariff Schedule (HTS). Different classifications carry different duty rates.
For example, inflatable boats might have a duty rate of 25% but inflatable boat fenders might by duty free. By simply mis-classifying the HS code of a product, an importer can potentially avoid all or more tariffs.
While CBP has the authority to inspect shipments, the reality is that most goods enter the country without detailed inspections.
Conclusion
American businesses are at a serious disadvantage when it comes to tariffs. Unlike foreign sellers who can operate with near impunity, U.S.-based companies must follow the rules—or face legal consequences.
Stronger enforcement before goods enter the country could help level the playing field. However, with government budget cuts and reduced funding for CBP, oversight is becoming weaker, not stronger.
The higher tariffs rise, the greater the incentive for businesses to find ways around them—and the wider the gap between those who play by the rules and those who don’t.
Until real enforcement changes take place, foreign sellers will continue dodging tariffs, leaving American businesses to pay the price.
