US Trade Representative Jamieson Greer discusses President Donald Trump’s decision to raise tariffs on South Korea and the trade deal between India and the EU with ‘Kudlow.’
A new analysis found that payments made by US mid-sized businesses to Chinese firms fell sharply last year as prices for goods imported from China it rose under the Trump administration.
The JPMorgan Chase Institute released a report on Thursday that found remittances by mid-sized firms to China fell sharply, falling by nearly 20 percent from 2024 to 2025 as overall international remittances remained strong.
“This is perhaps not surprising, since China has been the most affected by tariffs among the main trading partners of the US – both when considering the effective amount, which stands at 37.4% in October 2025, according to the Penn Wharton Budget Model, and in terms of policy uncertainty, since tariff announcements are often changed within less than 5 years before reaching a 1% reduction,” wrote the Institute.
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The report found that, among medium-sized firms that had previously they go out to Chinatheir exports to other parts of Asia increased, including Southeast Asia, Japan and India when looking at a sample of medium-sized firms with at least $5,000 in exports to China in both 2023 and 2024.
“One possible reason for the increase in flows to these countries could be substitution, but many other explanations are possible,” the authors note.
Mid-sized US firms’ payments to partners in China will drop in 2025 amid higher tariffs, the JPMorganChase Institute has found. (STR/AFP/Getty Images)
Clark Packard, a researcher at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, told FOX Business, “Right now, it’s somewhat uncertain whether Chinese products are exported to countries in the region, processed or processed (this is key) and then exported to the US on a large scale. That said, there are indications that it is possible.”
Packard said that as long as the products are processed in the second country, they do not represent diversion, a term used for commercial practices that aim to to exceed the values and other commercial rules.
“Transshipment is sending product to one country, label the origin of that country and send it to a third country without significant changes to the product. As long as the products undergo a major change or modification in a country, they are genuine products from that country,” Packard said.
“I would not be surprised if Chinese firms open processing centers in Vietnam and other Asian countries to finish products bound for the US and that this is a result of lower prices used in that country than in 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 the Chinese economy at the American Enterprise Institute, pointed to the flow of imports Vietnam and Taiwan as potential sources of imported goods.
“What shows the export of Chinese goods is the increase of goods from Vietnam, especially Taiwan. You can make an argument that Vietnamese goods compete with Chinese goods, and they succeed because of the costs in China,” said Scissors to FOX Business. “But there is a lot of Chinese investment in Vietnam in the area of consumer goods that we buy in Vietnam.
“If you’re a Taiwanese manufacturer in China and you’re facing high barriers to goods manufactured in China, it’s very easy to reclassify them as Taiwanese. It might just require a label. Usually, you change your manufacturing process so that there’s a final stop in Taiwan versus a final stop in China. Then, what you ship is counted as Taiwanese.”
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Tariffs are taxes on imported goods that are paid by the importer. (Brandon Bell/Getty Images)
The JPMorgan Chase Institute report also found that monthly tax payments made by US medium enterprises triple from the beginning of 2025.
Tax revenues for medium-sized firms jumped from about $100 billion a month at the beginning of 2025 and the previous two years to about $300 billion a month at the end of 2025.
“The stable trend was interrupted by a sharp increase from April 2025, which coincided with the implementation of the first rate hike that year. Total payments continued to rise in 2025 and eventually reached a level almost three times what it was until the beginning of 2025,” wrote the JPMorgan Chase Institute.
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