“Importers should be aware that while the COO claims made by their vendors may be correct under the source country’s rules, they may be incorrect under US rules”

“Importers should be aware that while the COO claims made by their vendors may be correct under the source country’s rules, they may be incorrect under US rules”

US importers are being warned to take care ensuring they understand country of origin applicable rules and verify claims made by their suppliers amid confusion surrounding the implementation of the Section 301 tariffs.

The US imposed new levies on another tranche of imports from China on 1 September, meaning around US$31bn in textile, apparel and home textile products are now subject to an additional tariff of 15%. The new tariffs will hit 92% of all apparel products and 53% of all footwear items imported into the US from China.

The remaining US$160bn in US imports from China – including US$4.7bn in textile, apparel and home textile products – are set to be hit by an extra 15% tariff from 15 December.

According to customs and trade law firm Sandler, Travis & Rosenberg (ST&R), conflicting reports about the correct test to apply to determine country of origin for purposes of the Section 301 tariffs the US is currently imposing on imports from China are causing confusion.

"Importers should be aware that while the COO claims made by their vendors may be correct under the source country's rules, they may be incorrect under US rules," it explains. "With an ever-increasing tariff burden at stake, as well as potential penalties for getting it wrong, it is important for importers to understand the applicable rules and verify COO claims made by their suppliers."

The law firm explains that unlike rules for value and classification, COO rules are not harmonised internationally. Countries often develop their own COO tests or adopt one from a particular free trade agreement. Even within a country the tests can vary depending on the specific issue involved. For example, different origin rules can exist for FTAs, product marking, or preference programme qualification, to name a few.

The US uses various COO tests in various circumstances, and there are essentially two tests used for determining COO for purposes of Section 301 duties: (1) substantial transformation or (2) the special origin rules found under 19 CFR Part 102. Which one to use depends on the product at issue.

"As a result, COO tests used by the country of manufacture (e.g., a specified percentage of local content) may not be applicable to determining origin for US import purposes," ST&R adds. "Similarly, the last country of processing and export may not be the country of origin for US purposes."

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