US Trade Representative Jamieson Greer discusses President Donald Trump’s decision to raise tariffs on South Korea and an India-EU trade deal on ‘Kudlow’.
A new analysis shows that payments from US-based mid-market companies to companies in China fell significantly last year tariffs on Chinese imports increased under the Trump administration.
The JPMorgan Chase Institute released a report Thursday finding that middle-market companies’ payments to China fell significantly, by about 20% between 2024 and 2025, while overall international payments remained stable.
“This is perhaps not surprising, as China has been the hardest hit by the tariffs among major US trading partners – both in terms of the overall effective rate, which stood at 37.4% in October 2025 according to the Penn Wharton Budget Model, and in terms of policy uncertainty, as tariff announcements shifted regularly over the year, briefly reaching rates as high as 125% before subsequently being reduced,” the Institute wrote.
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The report shows that this was previously the case with medium-sized companies outflow to Chinatheir outflows to other parts of Asia grew, including Southeast Asia, Japan and India, when looking at a sample of mid-cap companies with at least $5,000 outflows to China in both 2023 and 2024.
“One possible reason for the increase in flows to these countries could be import substitution, but many other explanations are possible,” the authors said.
Midsize U.S. companies’ payments to trading partners in China fell in 2025 due to higher tariffs, the JPMorganChase Institute found. (STR/AFP/Getty Images)
Packard said that as long as the products are changed in the second country, there will be no transshipment, a term used for trade practices that aim to avoid tariffs and other trading rules.
“Transshipment is shipping a product to one country, stick that country’s label of origin on it, and send it to a third country without making any serious changes to the product. As long as products in a country undergo a substantial transformation or change, they are truly products that originate from that country,” Packard said.
“I would not be surprised if Chinese companies open processing centers in Vietnam and other Asian countries to finish products ultimately destined for the US and that this is the result of a lower tariff applied to that country than to China.”
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President Donald Trump raised tariffs on China last year. (Lintao Zhang/Getty Images; Rebecca Noble/Getty Images)
Derek Scissors, a senior fellow who studies China’s economy at the American Enterprise Institute, pointed to import flows Vietnam and Taiwan as possible sources of transshipped goods.
“If you are a Taiwanese manufacturer in China and you face high barriers to goods produced in China, it is very easy to reroute them to Taiwanese. Maybe all you need is a label. At most, you change your production process so that there is a last stop in Taiwan versus a last stop in China. Then what you ship counts as Taiwanese.”
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Tariffs are taxes on imported goods paid by the importer. (Brandon Bell/Getty Images)
The JPMorgan Chase Institute report also found that monthly rate payments were made by mid-sized American companies have tripled since the beginning of 2025.
Rate outflows from mid-market companies have risen from nearly $100 billion per month in early 2025 and the previous two years to around $300 billion per month at the end of 2025.
“A stable trend was interrupted by a sharp increase beginning in April 2025, coinciding with the implementation of the first rate increases that year. Total payments continued to rise throughout 2025, eventually reaching levels about three times what they had been through early 2025,” the JPMorgan Chase Institute wrote.
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