Determining the Country of Origin When Exporting to the United States

According to U.S. regulations, to determine the country of origin of goods, one must consider the country where the good is produced or assembled, giving it its specific nature and intended use. The basic principle adopted by U.S. customs standards is that of substantial transformation. 

Determining the country of origin when exporting to the United States becomes a fundamental step, especially for companies that use parts or components of Chinese origin in their production.

Objective of the analysis conducted on this page of the ExportUSA website is to understand how to maintain Italy as the country of origin for goods when using parts or components of Chinese origin.

The Risk of Redetermining the Country of Origin for Exports to the United States

Especially now that the gap in U.S. tariffs between imports from China and imports from other countries has significantly widened, it is important to ensure that the use of Chinese parts or components in machine production by Italian manufacturers does not change the country of origin from Italy to China when importing to America.

In another part of our site, we have already addressed the issue of the country of origin when an Italian manufacturer imports into America before exporting to Canada. Here, we specifically discuss the determination of the country of origin during the production of the good.
 

The Economic Damage of Paying the Tariffs Imposed on China for Importing to America

The consequences of a change in the country of origin would be catastrophic because the duty for importing to America would rise from 15% for imports from Italy - Europe, to almost 50% as planned for imports to the U.S. from China. The calculation of tariffs imposed on China is complex, but it is enough to keep in mind that the tariffs imposed in 2018 under Section 301 are still in effect and that starting November 1, 2025, an additional duty of 34% could come into effect and, potentially, an additional duty of +100%. In short, a disaster for the Italian manufacturer who would be reclassified regarding the country of origin of their products when importing to the United States due to reasons related to the structure of their production process.
 

How to Determine the Country of Origin of Goods According to U.S. Customs Regulations

The fundamental concept for determining the country of origin is typical of U.S. customs standards and is known as Substantial Transformation.

There is no single specific criterion to quickly decide what the country of origin is. It is necessary to evaluate, on a case-by-case basis, a series of criteria related to the structure of the production process of the good to be imported into the United States.
 

Italian Product Containing Parts or Components of Chinese Origin

The case under study is that of the Italian manufacturer who uses parts or components of Chinese origin. In reality, the principle of substantial transformation also applies when components not necessarily Chinese are used. But being reclassified as the country of origin France, for example, would not cause any economic harm to the Italian manufacturer because the good would remain subject to the same U.S. customs regime intended for Italy [and for all of Europe, in fact].
 

Relevant Factors in Evaluating the Country of Origin of Goods for Importing to the United States

It should be clarified from the outset that simple assembly operations considered by U.S. customs regulations as "minimal or simple" - and not "significant or complex" - generally do not constitute a substantial transformation.

Next, it should be mentioned that the value of the component or part of Chinese origin is not the only element that U.S. customs considers, and certainly not the most important factor in determining what the country of origin is.

Although no single element is determinative on its own, U.S. customs uses various factors to evaluate whether an assembly operation is sufficiently "significant or complex" to constitute a substantial transformation. Among these, for example, are:

• Number of components assembled
• Number of different operations performed
• Total duration of operations
• Level of skill required for operations
• Resources employed in the design and development of the product

Thus, U.S. customs conducts a comprehensive and qualitative evaluation of the entire production process, favoring the analysis of added value and the technical and functional complexity of the operations, to determine the customs nationality of the resulting product, the country of origin of the goods in question.