Tariff engineering is a phrase many of us are familiar with. Put simply, it means to alter, before importation, the nature of a product to allow it to be assigned a new HTS code at the time of entry (import declaration). In detail, we can posit the follow examples:
· Pausing the manufacturing process in such a way that the article is classified differently than it would be if the manufacturing process was finished
· Adding something to the product in such a way that the addition results in a different HTS classification
· Removing an item from a GRI-3 set, so that the set is given a different HTS code with a lower duty rate
· Removing an item from a GRI-3 set, so that the set is given a lower duty rate
· Adding something to a GRI-3 set, so that the set is given a different HTS code with a lower duty rate
· Removing an item from a GRI-1 set so that the set is given a new, lower duty rate
o Example: removing pliers (duty rate 12%) from a tool set classified in 8206
In a world of tariff threats, exemptions, agreements, and reciprocal retaliatory measures, a focus on the proper classification under the Harmonized Tariff Schedule of the US has become a key part of all business planning (insert movie announcer voice).
What has been overlooked is the country of origin of the item being imported.
Until 2025, the duty rate, as defined by the country of origin, could generally fall into one of only three buckets:
· The column 1, General duty rate for imports into the US from all countries other than Cuba, North Korea, Russia, or Belarus (column 2)
· The column 1, Special duty rate (normally “free”) for imports from those same countries for goods that originate under a free trade agreement, duty preference program, etc.
· The column 2 duty rate for goods from North Korea, Cuba, Russia, or Belarus
o Friendly reminder that the column 2 duty rates are a holdover from the SMTA of 1930
o Please read the SMTA OF 1930.
o PLEASE.
Additional duty, such as antidumping or countervailing duties, defined by the nature of the product and its country of origin, can be significant but are, in general, an exception to the rule.
2025 gave us global duty rates based on the country of origin of the goods. These weren’t just origin-based duty rates for specific countries in specific industries, such as the Generalized System of Preferences. Instead, these were duty rates for all products from a country, with a schedule for every country in the world. These were done under the International Emergency Economic Powers Act (IEEPA) (insert Jaws theme song).
Origin Engineering(c), a term created, copywritten, and registered with the US Patent and Trademark Office by O’Meara and Associates, Inc.
What Is Origin Engineering©?
Simply put, Origin Engineering© is the practice of adjusting your sourcing or manufacturing processes to change the country of origin of your imported goods.
With tariffs tied not just to the classification but, in many cases regardless of the classification, the strategy of engineering the country of origin for your imported products is making a roaring comeback.
We’ve heard from clients whose Chinese suppliers started buying up land in Vietnam the week after the recent election. Why? Because they knew what was coming. They weren’t just thinking about factory logistics. They were thinking geopolitics, tariffs, and certificates of origin.
Smart.
Consider the following:
· Moving certain phases of the manufacturing process—where substantial transformation will take place–to another country, thereby imparting that country’s origin and associated duty rate to the imported good
· Adding something to the product in such a way that the addition results in a different country of origin, and hence duty rate, of the good
· In a GRI-E set, removing the item that defines the set’s essential character, so that the set is given a essential character and a different country of origin, and hence duty rate
· Adding something to a GRI-3 set, so that the set is given a different essential character and hence different country of origin, with the applicable different duty rate
The Legal Backbone: Substantial Transformation in Its Many Guises
In my article and video on the country of origin versus the country of export (here and here), I made clear that the country of origin is the last country in which the goods undergo substantial transformation to arrive at their final condition before importation in the US.
Put another way: the country of origin is the country in which the item’s essential character is born. In U.S. trade law, country of origin isn’t determined by where a product is shipped from. It’s determined by where it was substantially transformed. The last country in which the goods entered commerce is the country of export. The country of export and the country of origin may be different countries, or they may be the same country.
For example: a good can be made in Thailand but moved to Mexico for warehousing, then shipped to the US. When this good enters the US the country of origin will be Thailand and the country of export will be Mexico.
If the Thai good was transformed in Mexico into a new and unique article of commerce, then the country of export and the country of origin are both Mexico. The good may very well originate under the US-Mexico Canada Agreement. In this case, the good would qualify for duty-free treatment under that FTA, and for the reciprocal tariffs, the tariff for Mexican goods, not Thai goods would apply.
This is the legal linchpin of Origin Engineering©. And like most things in international trade, it sounds straightforward until you try to apply it.
Substantial transformation occurs when an article undergoes a process that results in a new and different article of commerce, with a distinct name, character, or use.
In other words: if you’re just bolting a few screws into a finished product, don’t expect CBP to buy the argument that you’ve created something new.
But if you’re taking raw or semi-finished materials and turning them into a functionally different product then that’s a much stronger case.
Let’s say you take sheet steel from China (chapter 72 of the HTSUS, send it to Vietnam where it is folded, cut, and painted so it is transformed into a table specifically designed to support a sewing machine (HS 8452.90). Though the steel is Chinese, the furniture is Vietnamese.
The difference lies in whether the processing creates a new commercial identity, not just a cosmetic or marginal improvement.
Legally, substantial transformation is the test used by U.S. Customs and Border Protection (CBP) to determine origin in the absence of more specific rules (like those in a free trade agreement). This test has been shaped over decades by rulings, court decisions, and administrative interpretations, and it remains a case-by-case analysis. There’s no universal checklist. The same process might count in one industry but fail in another.
OK, there is a checklist, and it is the product-specific rules of origin in each FTA for each HS code. But we’re discussing supply chains that do not involve FTAs, which are most supply chains, because there are more countries with which we do NOT have FTAs than there are countries with which we DO. Makes sense? No? Contact me.
This ambiguity is both a challenge and an opportunity.
For businesses seeking to shift country of origin through Origin Engineering©, substantial transformation offers a legitimate, legally grounded framework to do so. But it must be documented, defensible, and real. CBP looks beyond paperwork and marketing claims. They want to see actual, meaningful processing taking place in the declared country of origin.
And that’s where the strategy becomes less about compliance checkboxes and more about supply chain architecture. What may appear to be operational decisions (moving production, reconfiguring workflows, or altering sourcing) are strategic legal moves with trade implications.
Done right, it’s a smart, forward-thinking trade strategy. Done wrong, it’s a penalty waiting to happen. And a sad trombone.
Why Country of Origin Determination Matters Now More Than Ever
Generally, two things define duty rate: 1. The HTSUS classification, 2. The country of origin. Factor in the valuation and quantity and you get the duty amount. Until now, the focus has been on the HTSUS because, until now, when a preferential origin was not in play, the country of origin was generally irrelevant. The duty rate for a hammer from India, Germany, and Brazil was the same. The duty rate was dependent on the HTSUS classification.
Then came the reciprocal tariffs under the IEEPA in April 2025, and suddenly that hammer, though it had the same Most Favored Nation/Normal Trade Relations duty rate from India, Germany, and Brazil, had different reciprocal rates because all good from India, and all goods from Germany, and all goods from Brazil had different duty rates over and above the MFN duty rate.
Even without the IEEPA duties (thank you SCOTUS), this is still a relevant discussion, as importers look to move production to countries with which the US has free trade agreements, for example. Or when manufacturers look to move production due to logistics costs, delays, labor costs, etc.
That’s where Origin Engineering© steps in. But so do the risks.
If CBP decides your Vietnam facility is just putting stickers on boxes, or simply assembling pre-fab components from China, you could be on the hook for back duties, penalties, and even false claims liability. We need to ensure that the work being done can be described as “production” or “manufacturing” and that it results in a new country of origin.
“Made in [Insert Favorable Country Here]”
You might print “Made in [Country X]” on your box, but that doesn’t mean CBP will take your word for it. They question what was done before importation. Remember: they know the factory the item came from because you identified it (it’s in the MID) on the import declaration and the 7501.
Customs and Border Protection has significantly increased enforcement around origin claims. That includes Requests for Information (CF-28s), factory audits, origin verifications, and boots-on-the-ground site visits. If they think you’re stretching the truth on an origin claim, they’ll raise duties, demand back payments (plus interest), and possibly impose penalties.
And here’s the critical point:
CBP isn’t bound by what is on your vendor’s commercial invoice.
That means they’ll examine where components came from, what processing occurred in each location, and whether that processing meets the legal threshold of substantial transformation. If they determine that transformation didn’t happen in the claimed country then your origin claim fails. And those avoided tariffs come back with interest.
Worse, if they suspect intentional deception, you could be looking at penalties under the False Claims Act or other civil enforcement actions.
This is why manipulating the country of origin must be approached as a compliance strategy, not a marketing slogan. The claim “Made in [Country]” must be provable, traceable, and legally defensible. That means clear production records, supplier declarations, and a process that satisfies CBP’s origin determination criteria, not just the optics of a new country stamp.
In short: it’s a serious liability if your origin story doesn’t hold up under scrutiny.
So… should you engineer the origin of your products?
It’s worth a look. But not without guidance.
When done properly, changing the country of origin through legitimate substantial transformation can be a powerful way to manage tariff exposure. But you need:
- A strong understanding of origin determination
- Legal analysis of your production process
- Advanced planning
In short, don’t DIY your duty strategy.
Don’t Get Caught Flat-Footed (it’s World Cup 2026!)
The tariff landscape is rapidly shifting, and it appears as if it will continue until at least the next general election. And while some companies are scrambling, others are already laying foundations in Vietnam, Mexico, and other strategically located countries. Not just for cost reasons, but for origin.
If you’re exploring tariff engineering through Origin Engineering© then now is the time to ask hard questions about your supply chain and legal strategy. Because when the next wave of duties hits, you want to be holding an origin justification that can stand up in court.
Need help evaluating your country of origin claims or planning a pivot?
O’Meara and Associates helps importers protect themselves by building defensible, efficient, and strategic trade compliance programs. Let’s talk before the auditors do.
We’re writing a book on Origin Engineering(c) , so stay tuned.
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