New Trade Bill Cracks Down on Companies Dodging Tariffs by Relocating Production to Third Countries

The Axing Nonmarket Tariff Evasion Act, or the ANTE Act, gives the U.S. Trade Representative (USTR) new power to stop companies from certain countries from using a simple workaround to avoid paying U.S. tariffs. Essentially, if a company from a country with existing Section 301 duties moves its factory to a third country just to ship goods duty-free to the U.S., the USTR can now investigate and slap the original tariff right back onto those goods. This is a direct attempt to close a loophole that allows companies to bypass existing trade enforcement measures.

The Shell Game: Moving Factories to Skip the Bill

Think of this as the government trying to keep the score fair in international trade. The U.S. imposes tariffs—or duties—on goods from certain countries (called nonmarket economies) to address unfair trade practices. But some companies try to play a shell game: they simply move their production from their home country to a neighbor, a 'third country,' and then ship the goods from there, claiming they are now made somewhere else. The ANTE Act specifically targets this tactic.

Under Section 2, the USTR can launch an official inquiry if they suspect a “covered entity” is making this move purely to evade the existing duties. A “covered entity” is defined broadly: it’s any company owned or controlled by that nonmarket economy country, or even one where at least 25% of the ownership comes from that country, even if it’s masked through financial contracts or joint ventures. If you’re a small business owner who relies on fair competition, this provision could mean the difference between competing against a legitimately priced import and one that’s artificially cheap because it skipped out on tariffs.

The Enforcement Hammer: New Duties on Old Goods

If the USTR confirms that the company is indeed trying to dodge the tariff, they can impose “remedial measures.” This usually means hitting those goods, now being produced in the third country, with a new duty that can be as high as the original duty imposed on the home country. This measure stays in place as long as the original tariff is active. This is a significant tool because it allows the USTR to act quickly—even if the company only has immediate plans to start production—and ensures that the cost avoidance strategy doesn’t pay off.

However, this enforcement action does have a flip side for everyday shoppers. If the USTR imposes a new, high duty on a product—say, a specific piece of electronics now being routed through a new country—that cost is often passed down. While the goal is to protect domestic industries, consumers could end up paying slightly more for certain imported goods if this enforcement leads to higher prices at the store shelf. The bill also grants significant discretion to the USTR in deciding when to act, requiring them to explain their rationale to Congress, including the social and economic effects, if they decide not to impose a measure after an investigation.