Updated Jul 14, 2018

What we’re reading: The car buyers who short-circuit China tariffs

Photo: Scott Olson/Getty Images

There's big money to be made in re-selling luxury vehicles to "China's gray market," according to one man who experienced it first-hand, Travis Simpkins.

The big picture: Simpkins writes in Car and Driver that "an enterprising individual can make $10,000 this month buying luxury cars. You need a heartbeat, a driver's license, and that's about it."

"The manufacturers and their dealers have worked to design a foolproof system that will prevent you from buying a car to export to another country. Foolproof never works, though, as it underestimates the ingenuity of the fool."
— Travis Simpkins in Car and Driver
How he did it
  • He bought vehicles from a San Diego company which fronted him the money, he writes.
  • He was a straw buyer — which "typically has the shelf life and career trajectory of a Trump appointee."
  • Simpkins writes: "A single car can earn a straw buyer anywhere from $500 to $7,000 in commission. ... At the beginning of 2014, I did receive a 1099 for $30,500 from the company in San Diego."
What's happening in China
  • Simpkins writes that China's 25% tariff on new-car imports, comined "with car companies charging steeper prices for luxury vehicles there than they do in the U.S....it is easy to see how exporters can turn a profit."
  • "For example, the current base price of a new Range Rover is $88,345 here, but it starts at 1,518,000 yuan in China, which is about $240,000."
  • In 2015, Simpkins writes, "the Chinese government endorsed the gray market by creating a program that makes it easier for Chinese dealers to bring in vehicles directly from foreign markets."

Be smart: It can't last forever. Simpkins writes that in 2015, a Land Rover dealer "refused to sell my mom a vehicle...because our last name set off a DEFCON warning. I haven't bought a car for export in almost two years."

  • The risk: While Simpkins was "lyin' and buyin'," federal authorities got involved at the request of car manufacturers.
  • "Secret Service and Homeland Security agents were using civil forfeiture statutes to impound cars and freeze bank accounts."

Go deeper: Our special report on a new era of global trade wars

Go deeper

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

Japan's economy minister outlined plans on Monday to end the nationwide state of emergency as the number of new novel coronavirus cases continues to decline to less than 50 a day, per Bloomberg. Japan has reported 16,550 cases and 820 deaths.

By the numbers: Over 5.4 million people have tested positive for the virus as of Monday, and more than 2.1 million have recovered. The U.S. has reported the most cases in the world (over 1.6 million from 13.7 million tests). The U.K. is reporting over 36,800 deaths from the coronavirus — the most fatalities outside the U.S.

Coronavirus dashboard

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  1. Global: Total confirmed cases as of midnight ET: 5,401,701 — Total deaths: 345,060 — Total recoveries — 2,149,407Map.
  2. U.S.: Total confirmed cases as of midnight ET: 1,643,238 — Total deaths: 97,720 — Total recoveries: 366,736 — Total tested: 14,163,195Map.
  3. World: White House announces travel restrictions on Brazil, coronavirus hotspot in Southern Hemisphere Over 100 coronavirus cases in Germany tied to single day of church services — Boris Johnson backs top aide amid reports that he broke U.K. lockdown while exhibiting symptoms.
  4. Public health: Officials are urging Americans to wear masks headed into Memorial Day weekend Report finds "little evidence" coronavirus under control in most statesHurricanes, wildfires, the flu could strain COVID-19 response
  5. Economy: White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Public employees brace for layoffs.
  6. Federal government: Trump attacks a Columbia University study that suggests earlier lockdown could have saved 36,000 American lives.
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Updated 2 hours ago - Politics & Policy

U.S. coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios. This graphic includes "probable deaths" that New York City began reporting on April 14.

President Trump doubled down on his push to reopen schools, tweeting late Sunday: "Schools in our country should be opened ASAP."

Zoom in: Trump pushed back on NIAD Director Anthony Fauci cautioning against the move earlier this month, calling his concerns "not an acceptable answer."