How to Get Your Country of Origin Right?

As companies shift production out of China to reduce tariff exposure, many are setting up new supply chains in countries like Thailand, Vietnam, and Mexico. But getting the country of origin wrong when shipping to the United States can undo all this hard work when switching your supply chain. 

Mislabeling the country of origin isn’t a minor paperwork issue, it can lead to serious consequences. As stated in Supply Chain Dive, “The US CBP can deny entry for shipments or worse, actually seize your goods. You could also be hit with hefty fines, much more serious than a slap on the wrist.”

Even if you’re confident about where your product is assembled, that doesn’t necessarily mean you’re safe. U.S. Customs and Border Protection (CBP) determines country of origin based on where a product undergoes substantial transformation, not just where it ships from or where it’s labeled.

In this post, we’ll walk through what the rules really mean, the risks of getting it wrong, and most importantly, how to set up a process to get the country of origin right when importing into the U.S.

What Country of Origin Means Under U.S. Customs Rules

When shipping to the U.S., the country of origin is not about where a product ships from or where the final label is applied; it’s about the last location where enough transformation in the product occurred. 

This concept is called substantial transformation, and it’s the basis CBP uses to determine country of origin. If you’re importing goods into the U.S., you must declare the country where this transformation occurs, not necessarily where the product is assembled, tested, or packaged.

For example, if a product is made from Chinese components but only assembled or lightly modified in Thailand, CBP may still consider the country of origin to be China. In this case, even if you’re shipping from Thailand, the product would still be subject to the full China tariff rate.

According to U.S. regulations:

• Simply repackaging or labeling a product doesn’t change its origin.

• Basic assembly, finishing, or quality checks are rarely enough.

• The more value added and the more complex the manufacturing process, the more likely it is that the country of origin changes.

Understanding these rules is essential, especially if your production has moved as part of a China +1 strategy.  If the transformation process isn’t clearly documented and doesn’t meet CBP’s standards, your country of origin claim can be rejected, potentially triggering back duties, delays, or penalties.

Getting the country of origin right means aligning your actual production process with how CBP defines transformation, not just relying on where your factory is located.

How to Set the Right Process for Country of Origin Compliance

Ensuring that your country of origin designation is accurate when shipping to the United States requires more than just assuming based on the final shipping location. It’s about setting up a consistent, documented process that aligns with the CBP standards. If you wait until the shipping deadline to determine the country of origin, you’re setting yourself up for risk. A strong process not only avoids shipment delays and penalties but also ensures you apply the correct tariff rate and stay in compliance with federal law. Here's how to build a reliable country of origin compliance process into your supply chain.

Map Your Full Production Workflow

Start by creating a clear map of your end-to-end production process and supply chain. This should cover the origin of each component, where sub-assemblies occur, and where the final product is completed. Many companies make the mistake of assuming that the country of final assembly automatically qualifies as the country of origin, but under U.S. rules, that’s not always the case.

To properly evaluate the country of origin, you need to identify the step in your process where the product undergoes substantial transformation; this is the moment where it gains a new name, character, or use. For example, simply assembling components that are already finished does not typically qualify as a transformation. But if raw materials are converted into a functional product with a distinct identity, that likely does. The legal basis for this test can be found in U.S. regulations 19 CFR §102 and CBP’s interpretive guidelines. 

Mapping out the full process helps you pinpoint whether your current production setup supports a valid country of origin claim and, if not, what needs to change.

Document the Transformation

Once you’ve mapped out the manufacturing steps, the next critical task is to document where and how the substantial transformation occurs. It’s not as easy as the CBP taking your word for it. They expect you to provide claims with evidence. This means keeping detailed records of the bill of materials (BOM), manufacturing process flows, sub-supplier locations, labor content, and other supporting documentation.

For example, if you claim that the country of origin is Thailand, you should be able to show not only that final assembly occurs in Thailand, but that meaningful value is added there. That might include precision machining, plastic injection molding, or custom PCB soldering. If you’re working with suppliers or contract manufacturers, make sure they understand what documentation is required and are prepared to share production records with you.

CBP provides guidance through its Informed Compliance Publications, which outline how to meet documentation standards. Keeping these records organized and accessible is crucial, especially if your shipment is flagged for inspection or audit.

Work Closely With Your Customs Broker or Trade Advisor

Your customs broker or trade advisor should be part of this process, not just someone who files your paperwork at the end. Share your production maps and transformation documentation early in the sourcing or production planning phase. A good broker can help interpret CBP standards and assess whether your claimed country of origin is likely to be accepted.

They may also be able to reference past CBP rulings that apply to products similar to yours. CBP publishes past decisions in its CROSS database (Customs Rulings Online Search System), which is searchable by product category, process, or HS code. Reviewing these rulings can offer insight into how CBP interprets different types of manufacturing activities in terms of country of origin.

Proactive collaboration with your broker can help you avoid surprises at the border, correct mistakes before they become problems, and ensure the customs entry paperwork aligns with your production reality.

Request a Binding Ruling If You're Unsure

In cases where the country of origin determination isn’t 100% clear, especially when multiple countries are involved in production, it’s worth requesting a Binding Ruling from CBP. This is a formal, written decision that legally confirms how your product will be classified and what country of origin will be recognized.

The advantage of a binding ruling is that it removes uncertainty. CBP is bound to honor the decision as long as the facts you presented remain accurate. This can protect you from disputes, retroactive duties, or rejected shipments. Filing for a ruling typically takes about 30 days and is free of charge. 

This step is especially important if you’re producing a product in a new country for the first time or if your product has undergone design or sourcing changes that affect its composition.

Train Your Team and Suppliers

Finally, compliance needs to be embedded across your supply chain, not just in the customs paperwork. Your procurement, operations, and logistics teams should understand how country of origin is determined and why it matters. So should your suppliers and contract manufacturers.

It’s not uncommon for different parties in the supply chain to make conflicting country of origin assumptions. For example, a supplier might label the goods “Made in Thailand” based on shipment origin, while your broker identifies the transformation as occurring in China. That kind of mismatch is a red flag for CBP and can lead to delays or audits.

When evaluating new contract manufacturers, make the country of origin a part of your onboarding process. Require them to document the manufacturing steps and locations, and confirm they understand the requirements for U.S. imports. Set expectations for traceability and transparency upfront to avoid problems later.

Conclusion: Get The Country of Origin Right

As companies move production to countries like Thailand or Vietnam, getting the country of origin right has become a critical part of doing business with the U.S. market. A misstep in your country of origin declaration can lead to unexpected tariffs, shipment delays, or even seizure of goods at the port.

CBP is focused on where substantial transformation occurs, not where a product is boxed or labeled. That means you need to understand your production process in detail, document it thoroughly, and align your operations with CBP’s rules well before your product reaches the loading dock.

At EPower Corp, we help our customers navigate these issues every day. Whether you’re moving production to Thailand or diversifying your supply chain beyond China, we work with your team to make sure your country of origin claims are supported by real processes and clear documentation

If you’re planning a supply chain shift or have questions about country of origin compliance, let’s talk. A quick conversation now can help you avoid a major headache later.