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Transshipping Around U.S. Tariffs; Selling Inflated Inventory at Nike By Paul Page
U.S. agents looking for evidence that a Chinese manufacturer was trying to avert tariffs found it in a secret warehouse in Penang, Malaysia. That's where the local subsidiary of China's Qingdao Haiyan Group was storing boxes of wooden kitchen cabinets, including some that had been made in China and were being prepared to ship to the U.S. as if they were manufactured in Malaysia.
The WSJ's Inti Pacheco reports the operation was part of what one industry official calls an elaborate shell game using transshipping to avoid hefty levies imposed by Washington. That investigation focused on a business that is a supplier to some of the largest cabinet makers and distributors in the U.S., but officials say the problems go beyond one industry.
In recent years, U.S. Customs and Border Protection has found transshipment schemes used to obscure the origin of mattresses, solar panels, nails and quartz countertops. The findings show that Chinese companies have responded to trade restrictions by moving operations or establishing facilities in countries such as Vietnam, Malaysia or Thailand, where they can send raw materials to make goods.
The strategy is aimed at adding new, obscuring layers to supply chains, illustrating the challenges that U.S. authorities face in enforcing existing tariffs as well as potential new, expansive levies .
President-elect Donald Trump is threatening to impose tariffs on European imports unless the continent buys more American oil and gas. (WSJ) Costco Wholesale plans to pull forward inventory orders because of uncertainty over tariffs. (Supply Chain Dive) CONTENT FROM: PENSKE Gain Intel. Gain Ground with Penske.
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Nike's efforts to pare its inflated inventories are weighing on its retailing customers. The athletic footwear company has been aggressively slashing prices on its website, undercutting the prices at stores and risking sales revenues for itself and its retail partners. The WSJ's Inti Pacheco writes that the strategy is part of a race for cash at Nike, where new CEO Elliott Hill says clearing out aging inventory is a priority . Nike's inventories were flat on an annual basis in its latest quarter as overall sales fell 8%, although the inventory level receded from the previous quarter.
Nike's efforts show how business strategies at big suppliers can sometimes conflict with those of their customers. But Nike's dominating place in the footwear market makes the bumps worthwhile for retailers. Foot Locker, Macy's and others say their businesses will benefit from selling more Nike merchandise in the long run.
Number of the Day In Other News
Household spending in the U.S. advanced 0.4% in November. (MarketWatch)
A key barometer of U.S. consumer inflation rose a scant 0.1% last month. (MarketWatch)
A measure of U.S. consumer confidence jumped this month on a brighter outlook by Republicans. (WSJ)
U.K. retail sales edged up 0.2% from October to November. (WSJ)
Volkswagen agreed to a deal with its union to reduce its workforce by more than 35,000 and cut billions of dollars a year in costs. (WSJ)
Starbucks workers walked off their jobs at some union-represented locations in Chicago, Los Angeles and Seattle. (WSJ)
China lifted a four-year ban on Australian rock-lobster imports. (WSJ)
European Union imports of Russian liquefied natural gas expanded nearly 9% last year to a record high. (Financial Times)
New legislation introduced in Congress would add a tax on Chinese ships calling at U.S. ports. (Lloyd's List)
Taiwan's Yang Ming is ordering 13 midsized containerships. (The Loadstar)
Maersk Line is dropping Alaska from its trans-Pacific service in February. (KIAL)
Several of Australia's ports face a new round of strikes by unionized dockworkers. (Splash 247)
Specialty retailer Party City is closing all its stores and shutting its business. (CNN)
Bankrupt retailer Big Lots plans to shutter its stores next year after failing to sell itself. (CBS)
Japan's Toppan Holdings will buy five food packaging and other businesses from U.S. manufacturer Sonoco Products. (Nikkei Asia)
Investment firm Stonepeak bought a 2.3 million-square-foot portfolio of logistics properties near the Port of Houston. (Commercial Property Executive)
Trucking-focused hydrogen fuel cell technology manufacturer Hyzon Motors plans to liquidate the business. (Trucking Dive)
U.K. trucking pioneer Eddie Stobart died at 95 . (Motor Transport)
Canada Post says it is delivering letters to Santa despite a postal workers strike but that it won't arrange for return letters. $(CBC.AU)$
About Us
Paul Page is editor of WSJ Logistics Report. Reach him at [paul.page@wsj.com].
Follow the WSJ Logistics Report team: @PaulPage , @bylizyoung and @pdberger . Follow the WSJ Logistics Report on X at @WSJLogistics .
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
December 23, 2024 07:09 ET (12:09 GMT)
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