Ryan Petersen, Flexport's CEO, says tariffs near 35% give merchants a huge incentive to understate goods' value, with much of the cheating tied to Chinese sellers on Amazon.
Petersen says a legal gap letting foreign firms import without a US entity makes enforcement an honour system, and he proposes requiring a US entity, bank account and know-your-customer checks.
Petersen says Washington officials smile but do nothing after months of lobbying, so he plans to reframe the fight around national security and lost income tax.
Flexport's Ryan Petersen on Tariff Cheating, Trade History and Hormuz
Global trade runs on trust, paperwork and secured chokepoints, and each is now under strain. Tariffs reward undervaluing goods while a legal gap lets foreign sellers import with no US entity, and the Hormuz closure shows how fragile physical routes are. Petersen draws on trade history to argue that those who control logistics hold power.
Takeaways
Tariff fraud is rampant and enforcement is an honour system. With US tariffs around 35% on most goods, merchants gain by understating value, often Chinese sellers on Amazon. Chinese export data shows about $112bn more exports than US import declarations for 2025.
A legal gap lets foreign firms import anonymously. The US and UK let foreign companies register with customs and import with no local entity. Petersen proposes a required US entity, a US bank account and know-your-customer checks. Foreign importers also pay no US income tax.
Washington has not acted despite repeated lobbying. Petersen says he has lobbied about monthly for half a year, and officials smile and nod while nothing happens. He believes he must reframe the case around national security and lost income tax revenue.
Trade history shows how monopolies and markups shaped empires. The Dutch East India Company was the first listed joint stock company, later absorbed by the British one. Spice markups ran about 20 times through India and about 1,000 times through Venice, which funded Portuguese voyages.
The opium trade devastated China and still shapes memory. The British East India Company turned to selling opium for tea. Petersen estimates 20 to 30 percent of Chinese were addicted, and says a Boston family, the Forbes, moved about 20% of it. Gunboats enforced the trade.
Hormuz closure is a far bigger shock than Ever Given. About 20% of the world's oil passes through Hormuz, which has no alternative route. Qatar supplies 30% of helium, and the Middle East 30 to 50% of fertilizer. Ever Given stranded about 1,200 Flexport containers.
Chokepoint disruption raises costs and tests US naval security. Houthi attacks since December 2023 forced ships around Africa, adding about three weeks and lifting ocean freight prices, which Flexport probably raised about 60%. Petersen says this tested the Navy's promise to secure routes.
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