This episode explores the complexities of determining a product's country of origin in the age of global supply chains, focusing on the U.S.'s "Substantial Transformation Test." Against the backdrop of President Trump's tariffs on imported goods, particularly from China, businesses are increasingly concerned with accurately labeling their products to avoid significant duties. The podcast elucidates the core principle of the test: a product's origin is the last place it underwent a "substantial transformation" resulting in a new name, use, or character. For instance, a 1940s case determined that adding bristles to a wooden handle in the U.S. transformed it into an American hairbrush, while a later case involving boat shoes suggested that simply attaching soles to pre-made uppers was not enough to change the shoe's Indonesian origin. More significantly, the podcast highlights the subjective nature of this test, exemplified by a case involving sticky notes where customs officials determined the paper, not the glue or assembly, was the essence of the product. This system, while flexible and historically convenient, now faces scrutiny as businesses grapple with its unpredictable outcomes and seek legal guidance to navigate the intricacies of international trade regulations.
