Chinese exporters are offering lucrative deals to U.S. customers with promises of bearing the full burden of tariffs. Look beneath and there’s a web of illicit activity that’s propping up these shipments from China.

By using the “delivered-duty-paid” shipping approach where sellers pay for all import duties, and by under-invoicing shipments, some Chinese sellers are able to offer U.S. customers pre-tariff prices, while still turning a profit, according to legal experts and industry veterans.

Here’s how the scheme plays out: Chinese exporters, often through freight forwarders — companies that handle the logistics of shipping merchandise — understate the value of goods or mislabel them, often both, in the shipping documents to draw lesser duties.

Shipments are then routed through shell companies, registered under names of foreign entities or individuals, that act as “importers of record,” which the U.S. government deems responsible for the accuracy of customs filings and all applicable duties.

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