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Making America's economy stronger has been a top stated priority for the Trump administration, and two of its major tools to protect economic security have been export controls on potentially sensitive technology products and tariffs. But as NPR's Emily Feng reports, neither tool has been working as planned.
UNIDENTIFIED PERSON: (Inaudible).
EMILY FENG, BYLINE: Sean Stein, head of the US-China Business Council, is quick to praise export controls.
SEAN STEIN: Export controls are really important. Export controls are a national security measure that are sort of a check on what we trade.
FENG: Things like screening or even blocking foreign countries from buying products with the potential military use or using technology the U.S. is competing with other countries on - but the American companies he represents, from pharmaceuticals to manufacturing, are frustrated with export controls. They are administered by a government department called the Bureau of Industry and Security, or BIS, and it has been slow-walking exemptions, which businesses need to sell some of their products internationally.
STEIN: We've got cases that are waiting for more than a year.
FENG: When normally, getting a license to export sensitive goods should not exceed 90 days. But in an August survey Stein's organization did of 31 American firms which sell to China, 95% of the companies are facing license delays. That means sales lost sometimes to Chinese competitors.
STEIN: What we've seen in the survey is not, you know, millions of dollars of business, but billions of dollars of business that have been lost.
FENG: Why the delay? Kate Koren, deputy head of the economics program at the Center for Strategic and International Studies in Washington, says it is due to incoherent policy ever since China's leader Xi Jinping and President Trump met in South Korea last October.
KATE KOREN: Like, we're going to really go full-in on the national security aspect, or we're going to go, you know, kind of really full into the other side of promoting U.S. business and U.S. competition and allowing market access.
FENG: For example, the Trump administration suddenly rolled back more stringent export controls after the South Korea meeting. This mixed signaling to encourage U.S. business while also protecting American technology from China has confused BIS, Koren says.
KOREN: The leadership is unsure of the direction, which is leading to a delay. There's also been massive turnover.
FENG: Including Koren herself - until this January, she worked at BIS. One current and two other former BIS employees told NPR that fear of making a wrong decision has led BIS's head, Under Secretary Jeffrey Kessler, to personally screen all export license applications. That's creating a huge bottleneck, they said, and they requested anonymity because they were not authorized to speak to the media. Tariffs have been the other component to the Trump administration's economic toolkit. These tariffs, however, have also encountered major problems, including a type of fraud known as transshipment that's costing the U.S...
PETER NAVARRO: Forty to $75 billion every year - it's a huge amount.
FENG: That's economic adviser to Trump Peter Navarro, who recently briefed the press on a White House report he authored about transshipment, where goods are routed to hide their country of origin and then shipped to the U.S. to avoid higher tariff rates.
NAVARRO: We got into a world of tariffs where there's tariff evasions on steroids.
FENG: Another type of growing tariff fraud - underreporting of imports.
WILLIAM GEORGE: So right now, there is roughly a $112 billion gap.
FENG: This is William George. He's head of research at trade data firm ImportGenius, and he points out a widening gap between the value of goods China says it exports to the U.S. and the much lower number the U.S. says it receives from China. This could be because of middleman costs or lower prices in China. But George noticed the average value of cargo containers from China to the U.S. has also been dropping, according to data provided to NPR by ImportGenius, as well as from Datamine, a trade intelligence tool.
GEORGE: This drop was outpacing what we would expect to see for traditional normal shifting of supply chains in response to the tariff.
FENG: And this precipitous drop...
GEORGE: What that indicates to us is that there are sort of nonphysical schemes at work to minimize the tariff burden.
FENG: Nonphysical like fraud - with importing companies understating how much they're bringing into the U.S. and therefore paying less tariffs. Emily Feng, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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