WASHINGTON, D.C. – A new analysis from Goldman Sachs confirms that China's export machine is deflating goods prices across non-U.S. developed markets, a direct consequence of Beijing dumping excess industrial capacity onto global markets. The report highlights a stark reality for the American worker: protectionist trade barriers are being circumvented, while foreign competitors reap the disinflationary benefits denied to U.S. households.

Tariff Evasion Undermines National Policy

The economic data exposes a massive gap between what China reports exporting to the United States and what U.S. Customs and Border Protection records as arriving. For the year to date, Chinese customs data shows roughly $216 billion in exports to the U.S. Yet, U.S. Census Bureau figures report only $104 billion in imports. UBS economist Paul Donovan stated the discrepancy is "evidence that tariffs are being avoided" by misidentifying the origin of goods upon entry, thus paying a lower or zero tax rate.

A 1 percentage point increase in Chinese exports to a country correlates with a 0.5% decline in goods prices, Goldman Sachs found.

This circumvention effectively subsidizes Chinese state-owned enterprises at the direct expense of American manufacturers and the federal treasury, which is denied lawful revenue. It leaves domestic producers vulnerable to predatory pricing while delivering no price relief to American consumers.

Allies Benefit at America's Expense

Goldman Sachs economist Megan Peters detailed that Chinese exporters to non-U.S. developed markets have grown rapidly, partially driven by a reallocation of goods originally destined for the now-tariffed American market. On average, the surge in Chinese goods inflow has lowered goods prices by 0.6% in these developed nations. Simultaneously, China is pulling back its own imports from the world, slashing purchases of Western products like automobiles and pharmaceuticals as part of a deliberate push for economic self-sufficiency. This forces American and allied industries out of a massive market while China's own factories operate at full tilt to supply the West. The trade war, as structured, ultimately makes production costs cheaper for European and Asian competitors compared to U.S. firms, creating an unlevel playing field that punishes American labor.