Evasion behaviors of exporters and importers: Evidence from the U.S.-China trade data discrepancy

► We develop a simple misreporting model to explain trade data discrepancy. ► We test the model using mirrored U.S.-China eastbound direct trade data. ► We find strong evidence for under-reporting of Chinese exports to avoid paying VAT. ► We also provide evidence of tariff evasion at the U.S. border. ► There are also indirect evidence of transfer pricing for U.S. multi-nationals.