South Korea's customs agency has uncovered a surge in attempts to misrepresent the origin of foreign products, primarily from China, as South Korean exports, a maneuver designed to circumvent U.S. President Donald Trump's stringent tariff policies.

The Korea Customs Service (KCS) revealed on Monday that it had detected 29.5 billion won ($20.81 million) worth of country-of-origin violations in the first quarter of the year, following a targeted investigation last month. Alarmingly, 97% of these violations involved shipments destined for the United States.

This figure is particularly concerning when compared to the total violations for all of 2024, which amounted to 34.8 billion won, with US-bound shipments accounting for 62% of that total. The significant increase in US-bound violation percentage indicates a sharp increase in the practice.

The surge in these deceptive practices coincides with Trump's implementation of substantial tariffs on a range of products and countries, including those on China, which began escalating in February.

"There was a rise in disguised export attempts during Trump's first presidency and we expect there to be a similar trend," stated Lee Kwang-woo, investigation planning director at the KCS.

Anticipating a heightened risk, authorities initiated the recent investigation proactively to deter illegal exports. "We have already found signs of such attempts to avoid Trump's tariffs from the first quarter," Lee explained during a media briefing.

In a move to strengthen collaborative efforts, South Korean customs officials held a meeting with their US counterparts on Monday to discuss joint investigative strategies.

South Korean officials have expressed concerns that foreign companies, particularly those in neighboring China, might attempt to exploit South Korea's status as a major US ally with a free-trade agreement to bypass tariffs and regulations.

Notably, Trump recently imposed 25% tariffs on South Korean goods, which were subsequently suspended for three months. The US currently levies a 145% tariff on Chinese goods following a series of retaliatory trade actions, which economists warn have severely disrupted trade between the world's two largest economies.

The KCS's findings include several specific instances of fraudulent activity:

  • Cathode Materials: 3.3 billion won worth of cathode materials, used in batteries, were imported from China and falsely labeled as South Korean exports to the US, in an effort to avoid existing tariffs even before the recent Trump tariffs were implemented.
  • Surveillance Cameras: 19.3 billion won worth of surveillance cameras were imported from China in parts and reassembled in South Korea to circumvent US restrictions on Chinese communication devices.
Some of the fraudulently labeled goods have already been shipped abroad, while others remain at port.

The Korea Customs Service has established a dedicated task force to combat these illegal export attempts and is developing more specific countermeasures to protect domestic companies. The detected violations will be referred to prosecutors for further legal action.