Republicans look to stop China's 'backdoor' tariff dodging scheme

The Axing Nonmarket Tariff Evasion (ANTE) Act aims to stop subsidized and state-owned entities from setting up production in other countries to avoid tariffs.

"For far too long, adversaries like China have engaged in unfair trade practices, cheated the American economy, and cost the U.S. millions of jobs," Arrington said in a statement to Fox News Digital.

While tariffs seem to be discouraging Chinese manufacturers from exporting to the U.S., as evidenced by a recent Commerce Department report showing import levels at their lowest since the COVID-19 pandemic, imports have not stopped entirely.

The Chinese Communist Party (CCP) has found ways to evade the tariffs, such as setting up production in third-party countries or by shipping goods to another country and re-labeling them before sending them to the U.S. By labeling the goods as originating from another country, manufacturers dodge the high tariffs on China and instead get hit with much lower tariffs that are imposed on other nations. This is something that Arrington hopes to stop with his legislation.

Sen. Jim Banks, R-Ind., who is introducing companion legislation in the Senate, is also confident the bill will stop the CCP from falsifying the origins of imports.

"Communist China shouldn't be able to dodge U.S. tariffs by slapping a 'Made in Mexico' label on their products," Banks said in a statement to Fox News Digital. "My bill closes loopholes and stops the CCP from cheating American workers and manufacturers." 

Under U.S. law, goods must undergo "substantial transformation" in a country to qualify as originating from there. The transformation must significantly add to the value of the good, according to the International Trade Administration's (ITA) website. 

As an example, the ITA writes that if ingredients are taken from several countries and turned into baked goods, the country of origin can be listed as where the items were baked, as this constitutes a "substantial transformation." However, if produce from multiple countries is frozen and mixed in another nation, then the origin of each ingredient must be listed.