Starting in early 2020, a very unlikely anomaly started appearing in global trade data: China said it was selling more goods to the U.S. than the U.S. reported buying from China.
That was a reversal of the normal pattern and a product of the two nations’ trade war — but not an intended consequence. Instead, it was likely due to misreporting by both exporters in China and importers in the U.S., according to new research from Federal Reserve economists.
Companies in the U.S. could pay less in tariffs if they under-reported the value of goods imported from China, while firms in China could get higher value-added tax rebates if they over-reported the value of exports, the economists argue.
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