U.S. companies are evading President Donald Trump's goods tariffs by partly moving production abroad, shielding China for now from the effects of an escalating trade dispute, according to research by UBS Group AG.

“If U.S. companies move a stage of their manufacturing overseas [to a country other than China], the trade tax is avoided,” Paul Donovan, chief economist at UBS Wealth Management, said in a note. He added that China is not losing out as a result, as its goods are still making it to the U.S. eventually, just via a third country.

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