What You Need to Know About Transshipping – Briefing From U.S. Customs & Border Protection

On July 31, President Trump signed an executive order imposing new tariff rates on imports from 68 countries and the EU. The executive order took special aim at goods transshipped through other countries instead of coming straight from the country of origin, with little or no production or value-added in the country from which the goods are exported.

Section 3 of the executive order states that any article found by the U.S. Customs & Border Protection (CBP) to have been transshipped in order to evade applicable duties will be subject to enhanced enforcement measures. Specifically (1) A new 40 percent tariff will apply to the offending goods, replacing the reciprocal rate otherwise applicable based on the country of origin; (2) The importer may face additional fines or penalties including those authorized under 19 US Code § 1592, which governs civil penalties for customs fraud; and (3) The goods will remain liable for all other US duties, taxes, and charges applicable to imports from the actual country of origin.

In addition, CBP will not grant mitigation or remission of penalties assessed in such cases. There isn’t much detail yet available on how this will work but the transshipment tariffs are a key concern for companies that export from Vietnam. The Trump administration is looking to clamp down on content from China in US supply chains by also imposing novel rules of origin in its new tariffs – a move it says will combat transshipment, but one customs practitioners and analysts say is an expansive interpretation of the term that could create enforcement challenges alongside confusion for companies.

To address the many questions companies have about these new regulations, AmCham invites members to a special virtual briefing on the evening of September 12 featuring officials from U.S. Customs & Border Protection.