GlossaryEN1 min readUpdated: Jun 27, 2026

Country of Origin / Substantial Transformation (U.S. origin determination)

As of June 2026.

Quick Answer

Last updated: 27 June 2026Published: 24 June 2026

Source: 19 U.S.C. § 1304; 19 CFR Part 102; Anheuser-Busch Brewing Assn. v. United States, 207 U.S. 556 (1908); U.S. CBP CROSS Rulings; White House, reziproke Zoll-Proklamation (31.07.2025)

Category

Incoterms 2020 Simulator: Who bears costs & risk?

Reading time

1 min

Words

252

Mentioned in

–

Definition & Explanation

As of June 2026. Under U.S. customs law, a good's country of origin determines which country-specific tariff rate applies — and with the widely diverging rates in force since 2025 (reciprocal tariffs, Section 232 sector tariffs), this is often the costliest variable in the whole calculation. What counts is not the country of shipment or transshipment, but the place where the good last underwent a substantial transformation. This non-preferential origin test asks whether a new article of commerce has emerged with its own name, character and use; the legal foundations are the landmark ruling Anheuser-Busch Brewing Assn. v. United States (1908), the marking statute 19 U.S.C. § 1304 and 19 CFR Part 102. U.S. Customs and Border Protection (CBP) decides case by case (CROSS rulings). Mere repackaging or relabeling does not suffice; routing goods through a third country to disguise their true origin is illegal transshipment. Such deliberate rerouting through third countries such as Vietnam, Malaysia or Mexico — so-called origin laundering — does not change origin and triggers penalties such as the transshipment tariff. Section 232 sector tariffs (steel, aluminium, copper) apply their own material-based origin tests. The reciprocal-tariff proclamation of 31 July 2025 made such circumvention subject to an additional 40 percent penalty duty with no remission; after the Supreme Court's IEEPA ruling (20 February 2026), the legal basis of that regime is in flux. Not to be confused with preferential rules of origin (e.g. the USMCA tariff shift) or tariff engineering. Related: Section 232, reciprocal tariffs, HTS, additional duty.

Next steps

Matching tools and partners

Calculate customs valueWork out import duties and customs valueOpen Compare IncotermsClarify duties, cost and riskOpen Find HS codeDetermine the tariff number for customsOpen Find a matching partnerFreight forwarders and logistics partners worldwideOpen

Related Terms

You might also be interested in these terms

Origin master data

When a freight forwarder or exporter calls up a supplier record in their ERP, origin master data delivers the relevant customs att…

Learn more

Automated Origin Verification

Demonstrating valid preferential origin is one of the most demanding compliance tasks in international trade, and automated origin…

Learn more

Origin management

Freight forwarders, exporters, and importers rely on origin management to systematically determine, document, and substantiate the…

Learn more

Non-preferential Origin

Non-preferential origin, often called trade-policy origin or made-in origin, determines which country goods originate from for cus…

Learn more