• 11 investigates looks into whether companies are trying to avoid tariffs

    Updated:

    PITTSBURGH - New tariffs on Chinese goods by the Trump administration are causing some companies to go through other countries to avoid paying, and possibly doing so illegally.

    11 Investigates received a tip about possible issues with surge protectors made by the company Cyber Power Systems.

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    On the box of a surge protector we bought at a Home Depot near Pittsburgh, the sticker said the product was made in the Philippines.

    But if you peel off that sticker, the original place of origin is blackened out.

    On the surge protector itself, a larger sticker also said “Made in Philippines.”

    But when peeled off, there was an imprint that said “Made in China.”


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    Our sister stations in Atlanta, Boston, Charlotte, Jacksonville, Memphis and Seattle also bought the same type of surge protectors and found similar results.

    That raised questions with the U.S. Customs and Border Protection.

    "We appreciate you bringing this product to us because it now is resulting in an investigation into that company to try to determine why were those stickers placed on that product to show a different country of origin," said CBP Director of Field Operations Donald Yando.

    There are exceptions that allow companies to put new origin stickers on products, but it's unclear if that happened here.

    Yando said Cyber Power is complying with CBP's request for more information related to its shipping.

    "They used to import surge protectors from China predominately. Now, they’ve shifted to other countries. So, this appears at face value to be an attempt at evading duties,” he said.

    After several requests for an interview, a spokesman for Cyber Power responded with a statement defending its actions.

    "We began shifting the manufacturing of some products from China to the Philippines in the fourth quarter of 2018,” the statement said in part. “Rather than discard the printed packaging, we decided to save costs and be environmentally responsible by re-labeling the existing package with the new country of origin information."

    University of Pittsburgh business administration professor Jo Olson said she's unfamiliar with this case involving Cyber Power, but she said it's not unusual for companies to try to avoid paying tariffs.

    It's a reality she believes expanded when the Trump administration began implementing tariffs on Chinese goods in 2018, including a 25% tariff on surge protectors.

    "What they'll try and do is get around the tariffs by shipping them to somewhere else and maybe re-packaging or re-labeling and then trying to pretend they came from the Vietnam or the Phillippines or Malaysia," Olson said.

    By law, at least 35% of a product must be produced in a country for it to be considered the country of origin.

    Olson believes the tariffs give companies an incentive to try to avoid them, in some cases illegally.

    “The question is how likely are they to be caught?”

    The Consumer Product Safety Commission has not opened its own investigation into Cyber Power's surge protectors, but a spokeswoman said they are monitoring for possible safety hazards.

    While the surge protectors were bought at Home Depots across the country, the CBP said the company is not the importer of record and therefore not under investigation.

    A spokeswoman for Home Depot said all of its vendors are required to follow applicable laws.


     

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