# PIIE ties $99.8 billion US-China trade gap to tariff evasion *Bilateral customs gaps reached 63% of American imports through July, pointing to transshipment through Vietnam as US tariff rates on Chinese goods hold at 24%.* **Published:** October 3, 2026 **By:** Mina Okoro **Section:** Trade & Industrial Policy — Cross-border **Format:** Policy Tracker **Confidence:** medium **Source:** https://eastasiabrief.com/trade-policy/piie-ties-99-8-billion-us-china-trade-gap-492 **Publisher:** East Asia Brief (https://eastasiabrief.com/) --- ## What to know - Bilateral trade gap reached $99.8 billion through July 2026, equal to 63% of US imports from China - Vietnam transshipment discrepancy accounts for up to 57% of adjusted US-China customs gap - Full-year bilateral trade data for 2026 will be released on Feb. 5, 2027 ![A worker in protective gear inspects a solar panel component on an automated assembly line inside a factory. (AI-generated image)](https://eastasiabrief.com/media/2026-10-02-430641cdd1b7.webp) *A worker in protective gear inspects a solar panel component on an automated assembly line inside a factory. (AI-generated image)* The Peterson Institute for International Economics said Oct. 2 that discrepancies in bilateral trade statistics between the United States and China reached $99.8 billion during the first seven months of 2026. The Washington research group found that the seven-month divergence equaled 63% of all American merchandise imports recorded from China. That proportion is nearly five times the 13% average gap recorded between 2021 and 2024. American customs records published by the US Census Bureau showed $158.3 billion in goods imports from China and Hong Kong through July. Chinese customs authorities registered $258.1 billion in exports to the United States over that same timeframe. If the average monthly gap persists through December, the annual statistical difference between both customs agencies will exceed $170 billion, according to the institute. That total would represent the largest annual trade gap ever documented. Steep American tariff barriers created strong incentives for commercial traders to understate shipments or reroute goods through third countries. The findings appeared in a research report written by PIIE trade analyst Gregory Auclair. The effective US tariff rate applied to Chinese merchandise averaged 24% through July. By comparison, the average effective duty on goods imported from the rest of the world stood at 6%, according to the report. Those duty levels followed a 30% average effective tariff rate enforced by Washington across 2025. The persistent rate gap widened the financial payoff for bypassing American border tariffs through fraudulent customs declarations. Official figures from each country started diverging sharply after the tariff increases took effect in February 2025. By July, Chinese export declarations to America fell 4% below their 2024 average, the study showed. Over that identical period, American import receipts from China dropped 26% below 2024 levels. That divergence pointed to an artificial contraction in bilateral volumes rather than an actual cessation of goods trade. Trade analysts track three primary methods used by cargo owners to skirt tariffs: misclassifying products, under-invoicing declared values and relabeling origin certificates through third nations. Southeast Asian transit hubs serve as the main operational conduit. Vietnam demonstrated the sharpest reciprocal distortion in bilateral customs figures with the United States. Trade tallies between Washington and Hanoi generated a negative reporting discrepancy of $62.5 billion from January through July. That negative number means the United States recorded far more imports from Vietnam than Vietnamese authorities reported as exports to America. The Vietnamese reporting pattern mirrors the Chinese surplus gap in reverse. Subtracting the baseline monthly difference from 2021 through 2024 leaves a cumulative adjusted gap of $109.7 billion for China and Hong Kong. Relabeled cargo moving through Vietnam explains 57% of that adjusted figure, Auclair calculated. Bilateral trade numbers between Washington and Beijing have historically contained statistical noise. Before 2020, American import numbers typically exceeded Chinese export tallies because US customs authorities included freight and marine insurance in arrival valuations. That historical pattern inverted in 2020, shifting toward Chinese export surpluses. Federal Reserve researchers earlier found that tariff evasion accounted for about $55 billion of an $88 billion shift in bilateral reporting between 2018 and 2020. The latest tariff rounds in 2025 compounded that structural distortion across wider product lines. Heavy industrial inputs, consumer electronics components and apparel face the strongest financial pressure to conceal original Chinese factory origin. The PIIE report does not identify individual corporate entities or private freight forwarders, because national customs bureaus aggregate monthly merchandise filings. The author did not calculate firm-level exposure across specific corporate supply chains. The study does not establish what exact fraction of the $99.8 billion gap stems from de minimis express parcels, differing shipping terms or port customs delays. Macroeconomic trade tables cannot separate administrative valuation errors from unlawful fraud. Systematic electronic matching of transaction-level customs declarations between Washington and Beijing would help curb tax fraud, according to Auclair. Although a formal framework for bilateral customs cooperation already exists, practical administrative implementation remains minimal. PIIE will host an analysis of North American supply-chain integration on Oct. 7, followed by a global trade forum on Oct. 14. Customs agencies in Washington and Beijing will publish complete 2026 trade data on Feb. 5, 2027. ## Impact map | Event | Korea | China | Japan | Global impact | | --- | --- | --- | --- | --- | | US-China trade data gap and tariff evasion | intermediate component suppliers exporting to Vietnam face stricter US rules-of-origin audits | direct US shipments fall 26% below 2024 levels while exporters reroute via Southeast Asia | precision parts suppliers to Southeast Asian assembly plants face heightened US customs scrutiny | average effective US tariff on Chinese goods holds at 24% versus 6% baseline for other nations | ## In this story - **Policy:** Tariffs, Economic Security - **Impact:** Supply Chain, Compliance, Pricing ## Primary sources 1. piie.com --- Cite as: East Asia Brief, "PIIE ties $99.8 billion US-China trade gap to tariff evasion," October 3, 2026. https://eastasiabrief.com/trade-policy/piie-ties-99-8-billion-us-china-trade-gap-492