How did billions of dollars of Chinese Mushrooms get sold in the US, tax free, labeled as Product of the USA?
Exposing the deceptive practices of Chinese mushroom companies
Deceptive Labeling Practices
The Loophole
Current regulations allow companies to label a product as 'Product of the USA' if it undergoes "substantial transformation" in the U.S. This vague definition can be exploited by companies that simply repackage or minimally process imported mushrooms.
Misleading Marketing
Some companies use imagery and language that evoke American farms and values, further deceiving consumers into believing they are buying domestically grown mushrooms.
Tariffs & Abusive Transfer Pricing
Faulty CBP Rulings
Since the late 90’s, CBP has issued rulings based on deceptive samples presented at the border. These rulings allow mushrooms to avoid tariffs.
Abusive Transfer Pricing
Chinese mushroom companies have started US subsidiaries. They sell the mushrooms to companies they own in the US at lower than commercially reasonable prices to game the tariffs.
These Chinese owned US companies then sell the mushrooms into grocery store distribution in the US, and the profits return to China. In 2024 alone, an estimated $400 million dollars worth of mushrooms were sold in the US and the money was transferred back to China.
Reduced Investment
The uncertainty caused by unfair competition is discouraging investment in U.S. mushroom farms, hindering innovation and growth.