South Korea Discovers Efforts to Misrepresent Imported Goods as Domestic to Evade US Tariffs

SEOUL - South Korea's customs agency has reported a significant increase in attempts to mislabel foreign products as domestic exports, primarily originating from China, in a bid to evade tariffs imposed by the United States. The Korea Customs Service (KCS) revealed that in the first quarter of this year, violations related to the country of origin amounted to approximately 29.5 billion won (around $20.81 million), with 97% of these violations linked to shipments destined for the U.S.

This figure represents a sharp increase compared to the entire year of 2024, which saw total violations of 34.8 billion won, with U.S.-bound shipments accounting for only 62%. The KCS conducted a special investigation last month that uncovered these hidden export attempts, highlighting a growing trend since the onset of U.S. tariffs under the Trump administration.

Lee Kwang-woo, an official with the KCS, noted that the rise in attempts to disguise exports was notable during Trump's first term and anticipates a continuation of this trend. In response, the agency has ramped up its investigations to proactively address illegal exports.

Officials from South Korea recently convened with U.S. representatives to discuss collaborative efforts aimed at tackling these violations. Concerns have been raised that foreign firms, particularly from China, may increasingly use South Korea--an ally of the U.S. with a free trade agreement--as a conduit to circumvent tariffs and regulations.

Earlier this month, the U.S. enforced 25% tariffs on goods from South Korea, although these were temporarily suspended for three months. In contrast, China is currently facing tariffs as high as 145% due to ongoing trade disputes between the two largest economies in the world.

Among the violations uncovered, approximately 3.3 billion won worth of cathode materials used in battery production were imported from China and falsely labeled as South Korean to avoid tariffs. Additionally, 19.3 billion won worth of surveillance camera components were imported from China, assembled in South Korea, and then exported to the U.S. to bypass restrictions on Chinese technology.

Some of the flagged goods have already been shipped abroad, while others remain at the port. The KCS has established a special task force dedicated to preventing illegal export activities and is developing specific strategies to safeguard domestic industries from these practices. The agency intends to refer the identified violations to prosecutors for further action.