MSU economist says tariff crackdown could raise costs for Lansing shoppers

A federal push to stop companies from disguising the true origin of imported goods could raise prices for Mid-Michigan consumers, according to a Michigan State University economist. Oren Ziv, an associate professor of economics at MSU, said the practice known as transshipping — routing goods through a third country to dodge higher U.S. tariffs — is widespread and hard to detect.

A recent White House report identified roughly 40 countries involved in such rerouting networks. U.S. Customs and Border Protection plans to use artificial intelligence to conduct invoice-by-invoice audits at the border, but Ziv said the discrepancies are often too subtle for standard detection tools since trade rules hinge on where specific parts of a product's production occurred.

Ziv said cracking down on the practice would protect federal tax revenue but ultimately raise costs for consumers seeking the lowest prices on general goods. He also noted local manufacturers can get caught between tariffs meant to protect them and higher costs on imported raw materials, citing an appliance maker that lobbied for tariffs on Chinese appliances in 2018 only to face higher costs on imported Chinese steel.

Despite political attention on the nation's trade deficit, which stands at $371 billion this year, Ziv said a widening deficit has historically signaled a stronger domestic economy rather than a weaker one.

Read the full story at wilx.com.