USTR says the U.S. goods deficit with China fell 46 percent. But the goods didn’t stop coming — importers just declared them worth less. Treating customs “value” as an appraisal hides the undervaluation now driving the numbers.
In its June 5 request for comments on a new “managed trade” mechanism with China, the Office of the U.S. Trade Representative offered a headline statistic as proof its approach is working: “In March 2026, the U.S. goods trade deficit with China was down 46% year-over-year.” Tariffs, USTR concludes, have “worked effectively to bring bilateral trade closer to balance.”
The number is real. Census trade data confirms the March goods deficit with China fell from about $18.0 billion to $9.8 billion — down 45.8 percent. But look at what actually moved.
The Misleading “Value” Data
U.S.–China goods trade, March
March 2025
March 2026
Change
General imports from China
$29.5B
$20.9B
−29.3%
U.S. exports to China
$11.5B
$11.1B
−3.5%
Goods trade deficit
$18.0B
$9.8B
−45.8%
First, to get it out of the way, the trade deficit with China did not fall due to more U.S. exports to China; exports to China actually fell 3.5 percent.
What actually drove the decline in the trade deficit was importers’ customs declarations dropping $8.7 billion. But that import figure is not a count of goods that arrived; i.e., actual “trade”. It is a tally of what importers declared those goods to be worth.
"Value" is a Declaration, Not an Appraisal
The trade figures repeated every month are not appraisals. They are customs declarations — the values importers write on their own entry paperwork to tell Customs and Border Protection how much duty they owe. No independent assessor certifies the cargo’s worth; the importer states a value, and after decades of self-reporting “trade facilitation” reforms, the government largely takes it. Under an ad valorem tariff — a duty set as a percentage of declared value — the party declaring that value has every incentive to make it small. So when “imports from China” fall, the question is whether fewer goods arrived or the same goods were simply declared worth less. The volume data answers it.
The Goods Kept Coming: See 9,360 Tariff Lines
Comparing every 10-digit HTSUS line of U.S. imports for consumption from China — March 2026 against March 2025, limited to the 9,360 lines reporting both a customs value and a physical quantity in both months, about 92 percent of all China import value — produces a flat contradiction:
March 2026 vs. March 2025 (9,360 HTS-10 lines)
Change
Declared customs value
−33.0% ($25.8B → $17.3B)
Physical quantity (value-weighted)
+5.9%
Implied unit value (price per unit declared)
−36.8%
Declared value collapsed by a third — but quantity rose almost 6 percent. More units crossed the border, declared to be worth dramatically less. On 1,251 of those lines, quantity rose while declared value fell; together, their volumes climbed about 89 percent while declared unit values dropped about 62 percent. A few real examples from the same data:
HTS-10
Goods
Quantity
Declared value
Unit value
8517.62.0090
Voice/image/data machines (telecom)
+147%
−55%
−82%
8471.60.2000
Computer keyboard units
+337%
−42%
−87%
6307.90.9891
Made-up textile articles, NESOI
+27%
−31%
−46%
9503.00.0090
Toys and parts, NESOI
+32%
−4%
−27%
3004.90.9215
Anti-infective medicines, retail packaged
+687%
−82%
−98%
A keyboard is a keyboard. The claim that the per-unit value of computer keyboards from China fell 87 percent in a year — while the number shipped more than quadrupled — does not survive contact with common sense. What changed was not the keyboards. It was the incentive to describe them accurately.
Why Undervaluation Took Off After Liberation Day
The timing is the tell. The comparison straddles April 2, 2025 — “Liberation Day,” when sweeping tariffs were extended across the board to Chinese goods. For thousands of these lines, it was the first time the product faced any meaningful tariff at all. Household plastics, textiles, toys, small electronics and accessories had long entered at or near a zero MFN rate and escaped the earlier Section 301 lists. While the duty was zero, no one had a financial reason to shade the declared value. The moment a real ad valorem rate attached, that value became the lever setting the tax — and it began to drop. This is the mechanism, not a coincidence of prices: every dollar shaved off a declared value under a 25, 50, or 100-plus percent duty is money kept. Nor is it a one-month artifact — the same exercise for April 2026 against April 2025 (9,143 lines, 90 percent of value) shows declared value down about 26 percent while physical volume held essentially flat.
Henry Clay Saw This in 1842
None of this is new. Defending specific duties and “home valuation” on March 1, 1842, Henry Clay described the trap precisely:
“As things now stand, we lay the duty, but foreigners fix the value of the goods. Give me but the power of fixing the value of the goods, and I care little, in comparison, what may be the rate of duty you impose. It is evident that on the ad-valorem principle, it is the foreigner who virtually fixes the actual amount of the duty paid. It is the foreigner who, by fixing that value, virtually legislates for us — and that in a case where his interest is directly opposed to that of our revenue. I say, therefore, that independently of all considerations of protection, independently of all ends or motives but the prevention of those infamous frauds which have been the disgrace of our customhouse — frauds in which the foreigner, with his double and triple and quadruple invoices, ready to be produced as circumstances may require, fixes the value of the merchandise taxed — every consideration of national dignity, justice, and independence, demands the substitution of home valuation in the place of foreign.”
Clay’s answer was specific duties — so many cents per pound, per pair, per unit — which a “double and triple and quadruple invoice” cannot game, because a kilogram is a kilogram whatever the paperwork claims. The Tariff of 1842 made that switch, and the customhouse frauds that had been its disgrace receded.
What Follows
Two conclusions. First, the shorthand that treats declared customs value as appraised value should be retired. When declared value falls while quantities rise, the accurate description is not “imports declined” but “importers declared lower values” — an allegation about worth, made by the party that profits from understating it.
Second, USTR should not build policy on the deficit number. A deficit that narrows because importers declare lower unit values — while containers keep arriving and exports to China fall — is not balance; it is mismeasurement. Locking in a fixed-value “managed trade” arrangement atop a value series hollowed out by undervaluation would institutionalize the blind spot. The remedy is Clay’s: where unit values are eroding fastest, convert ad valorem rates to specific or compound duties pegged to physical quantity — as CPA has urged, and as the September 2025 Section 232 wood-products proclamation already contemplates. Extend it to steel, aluminum, and the consumer-goods lines where, as 9,360 tariff lines now testify, the taxpayer is choosing a value declaration to minimize their own tax liability.
Based on U.S. Census Bureau trade data (country code 5700 — China), retrieved June 2026. Deficit figures use general imports and total exports; the line-level comparison uses imports for consumption (the duty-paying entries), covering the 9,360 HTS-10 lines reporting both customs value and Quantity 1 in March 2025 and March 2026 (~92% of China import value); April covers 9,143 lines (~90%). Quantity change is value-weighted (Laspeyres); unit-value change is the implied Paasche price relative.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Don’t Be Misled by the Falling Value of Chinese Imports
USTR says the U.S. goods deficit with China fell 46 percent. But the goods didn’t stop coming — importers just declared them worth less. Treating customs “value” as an appraisal hides the undervaluation now driving the numbers.
In its June 5 request for comments on a new “managed trade” mechanism with China, the Office of the U.S. Trade Representative offered a headline statistic as proof its approach is working: “In March 2026, the U.S. goods trade deficit with China was down 46% year-over-year.” Tariffs, USTR concludes, have “worked effectively to bring bilateral trade closer to balance.”
The number is real. Census trade data confirms the March goods deficit with China fell from about $18.0 billion to $9.8 billion — down 45.8 percent. But look at what actually moved.
The Misleading “Value” Data
U.S.–China goods trade, March
March 2025
March 2026
Change
General imports from China
$29.5B
$20.9B
−29.3%
U.S. exports to China
$11.5B
$11.1B
−3.5%
Goods trade deficit
$18.0B
$9.8B
−45.8%
First, to get it out of the way, the trade deficit with China did not fall due to more U.S. exports to China; exports to China actually fell 3.5 percent.
What actually drove the decline in the trade deficit was importers’ customs declarations dropping $8.7 billion. But that import figure is not a count of goods that arrived; i.e., actual “trade”. It is a tally of what importers declared those goods to be worth.
"Value" is a Declaration, Not an Appraisal
The trade figures repeated every month are not appraisals. They are customs declarations — the values importers write on their own entry paperwork to tell Customs and Border Protection how much duty they owe. No independent assessor certifies the cargo’s worth; the importer states a value, and after decades of self-reporting “trade facilitation” reforms, the government largely takes it. Under an ad valorem tariff — a duty set as a percentage of declared value — the party declaring that value has every incentive to make it small. So when “imports from China” fall, the question is whether fewer goods arrived or the same goods were simply declared worth less. The volume data answers it.
The Goods Kept Coming: See 9,360 Tariff Lines
Comparing every 10-digit HTSUS line of U.S. imports for consumption from China — March 2026 against March 2025, limited to the 9,360 lines reporting both a customs value and a physical quantity in both months, about 92 percent of all China import value — produces a flat contradiction:
March 2026 vs. March 2025 (9,360 HTS-10 lines)
Change
Declared customs value
−33.0% ($25.8B → $17.3B)
Physical quantity (value-weighted)
+5.9%
Implied unit value (price per unit declared)
−36.8%
Declared value collapsed by a third — but quantity rose almost 6 percent. More units crossed the border, declared to be worth dramatically less. On 1,251 of those lines, quantity rose while declared value fell; together, their volumes climbed about 89 percent while declared unit values dropped about 62 percent. A few real examples from the same data:
HTS-10
Goods
Quantity
Declared value
Unit value
8517.62.0090
Voice/image/data machines (telecom)
+147%
−55%
−82%
8471.60.2000
Computer keyboard units
+337%
−42%
−87%
6307.90.9891
Made-up textile articles, NESOI
+27%
−31%
−46%
9503.00.0090
Toys and parts, NESOI
+32%
−4%
−27%
3004.90.9215
Anti-infective medicines, retail packaged
+687%
−82%
−98%
A keyboard is a keyboard. The claim that the per-unit value of computer keyboards from China fell 87 percent in a year — while the number shipped more than quadrupled — does not survive contact with common sense. What changed was not the keyboards. It was the incentive to describe them accurately.
Why Undervaluation Took Off After Liberation Day
The timing is the tell. The comparison straddles April 2, 2025 — “Liberation Day,” when sweeping tariffs were extended across the board to Chinese goods. For thousands of these lines, it was the first time the product faced any meaningful tariff at all. Household plastics, textiles, toys, small electronics and accessories had long entered at or near a zero MFN rate and escaped the earlier Section 301 lists. While the duty was zero, no one had a financial reason to shade the declared value. The moment a real ad valorem rate attached, that value became the lever setting the tax — and it began to drop. This is the mechanism, not a coincidence of prices: every dollar shaved off a declared value under a 25, 50, or 100-plus percent duty is money kept. Nor is it a one-month artifact — the same exercise for April 2026 against April 2025 (9,143 lines, 90 percent of value) shows declared value down about 26 percent while physical volume held essentially flat.
Henry Clay Saw This in 1842
None of this is new. Defending specific duties and “home valuation” on March 1, 1842, Henry Clay described the trap precisely:
“As things now stand, we lay the duty, but foreigners fix the value of the goods. Give me but the power of fixing the value of the goods, and I care little, in comparison, what may be the rate of duty you impose. It is evident that on the ad-valorem principle, it is the foreigner who virtually fixes the actual amount of the duty paid. It is the foreigner who, by fixing that value, virtually legislates for us — and that in a case where his interest is directly opposed to that of our revenue. I say, therefore, that independently of all considerations of protection, independently of all ends or motives but the prevention of those infamous frauds which have been the disgrace of our customhouse — frauds in which the foreigner, with his double and triple and quadruple invoices, ready to be produced as circumstances may require, fixes the value of the merchandise taxed — every consideration of national dignity, justice, and independence, demands the substitution of home valuation in the place of foreign.”
— Henry Clay, March 1, 1842, The Life, Correspondence, and Speeches of Henry Clay
Clay’s answer was specific duties — so many cents per pound, per pair, per unit — which a “double and triple and quadruple invoice” cannot game, because a kilogram is a kilogram whatever the paperwork claims. The Tariff of 1842 made that switch, and the customhouse frauds that had been its disgrace receded.
What Follows
Two conclusions. First, the shorthand that treats declared customs value as appraised value should be retired. When declared value falls while quantities rise, the accurate description is not “imports declined” but “importers declared lower values” — an allegation about worth, made by the party that profits from understating it.
Second, USTR should not build policy on the deficit number. A deficit that narrows because importers declare lower unit values — while containers keep arriving and exports to China fall — is not balance; it is mismeasurement. Locking in a fixed-value “managed trade” arrangement atop a value series hollowed out by undervaluation would institutionalize the blind spot. The remedy is Clay’s: where unit values are eroding fastest, convert ad valorem rates to specific or compound duties pegged to physical quantity — as CPA has urged, and as the September 2025 Section 232 wood-products proclamation already contemplates. Extend it to steel, aluminum, and the consumer-goods lines where, as 9,360 tariff lines now testify, the taxpayer is choosing a value declaration to minimize their own tax liability.
Based on U.S. Census Bureau trade data (country code 5700 — China), retrieved June 2026. Deficit figures use general imports and total exports; the line-level comparison uses imports for consumption (the duty-paying entries), covering the 9,360 HTS-10 lines reporting both customs value and Quantity 1 in March 2025 and March 2026 (~92% of China import value); April covers 9,143 lines (~90%). Quantity change is value-weighted (Laspeyres); unit-value change is the implied Paasche price relative.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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