Inti Pacheco of The Wall Street Journal reports U.S. Customs uncovered a suspected scheme by China’s Qingdao Haiyan Group to evade tariffs by mislabeling Chinese-made cabinets as Malaysian. Pacheco writes:
U.S. agents had to climb over piles of boxes to see inside the warehouse. They had learned about the secret building after finishing their tour of cabinet production facilities in Penang, Malaysia.
The place was packed with boxes of ready-to-ship wooden cabinets that looked identical. Some were stamped as made in China and others had labels saying they were made in Malaysia, according to a Customs report reviewed by The Wall Street Journal.
U.S. Customs and Border Protection, or CBP, agents were inspecting the site as part of a late 2022 inquiry into allegations that subsidiaries of Chinese company Qingdao Haiyan Group were evading tariffs. Haiyan had been accused of sending Chinese-made cabinets to the U.S. by shipping them through Malaysia, masking the origin of the goods—a scheme known as transshipping.
The investigation has splintered the kitchen cabinet industry. Haiyan has been a supplier to some of the largest cabinet makers and distributors in the U.S., such as American Woodmark. They, in turn, supply retail giants such as Lowe’s and Home Depot. […]
KCMA took the case to the Court of International Trade, and a judge in October 2024 directed CBP to review the case a third time, saying Haiyan controlled the Malaysian and U.S. subsidiaries.
Meanwhile, the U.S. Commerce Department ruled in July 2024 that wooden cabinets that used Chinese plywood fell under the scope of the antidumping order. Malaysian or Vietnamese suppliers must certify that they aren’t using components made in China. Cabinetworks in September contested the ruling in the Court of International Trade.
Read more here.
