Rules of Origin and Transshipment Risk for Thai Exports to the US

When US tariffs on goods from one country rise faster than on goods from another, some trade inevitably shifts. Some of that shift is real: companies build or expand factories in Thailand, hire staff, buy local materials and make products here. Some of it is not: goods made elsewhere are shipped through Thailand, repacked or lightly processed, and declared to US customs as Thai. The first is legitimate investment that Thailand actively encourages. The second is transshipment to evade duties, and it creates risk not only for the companies involved but for every honest Thai exporter selling to the United States.

This guide explains how the US decides country of origin, what substantial transformation means in practice, how US Customs and Border Protection (CBP) detects and investigates transshipment, what the consequences can be, and which records Thai manufacturers and exporters should keep so they can prove their goods are genuinely Thai. It also covers the Thai side: the Department of Foreign Trade's tighter checks on certificates of origin for the US.

US tariff policy has changed several times since 2025, and some measures have been introduced, modified or ended. This article therefore explains the principles that stay stable, origin rules, evidence and enforcement, and asks you to confirm the current tariff rates and measures for your products with a US customs broker or trade lawyer. It is general information, not legal advice.

How does the US decide a product's country of origin?

Under US customs regulations, the country of origin is the country where the goods were manufactured, produced or grown; if they were further processed in another country, origin moves there only if that work substantially transformed them.

The basic rule is in 19 CFR 134.1(b), part of the US regulations on country-of-origin marking. It defines country of origin as the country of manufacture, production or growth of any article of foreign origin entering the United States, and adds that further work or material added in another country must effect a substantial transformation to make that other country the country of origin. Separate rules apply to goods from Canada and Mexico under the US–Mexico–Canada Agreement, and some product areas such as textiles have their own specific rules, but for most Thai exports the substantial transformation test is the starting point.

Two points follow directly. First, origin is about manufacturing, not shipping. A product made in one country and shipped from a Thai port is still a product of the country where it was made. The exporter's address, the port of loading and the invoice currency do not change that.

Second, origin is decided product by product. A Thai factory can make some products that are clearly Thai and others, built mostly from imported parts with little local work, that are not. Each product line needs its own analysis.

Origin matters to US customs for several reasons at once: which duty rates and trade measures apply, how the goods must be marked, whether anti-dumping or countervailing duties apply, and whether any import restrictions apply. Getting origin wrong can therefore affect several obligations in one declaration.

What counts as substantial transformation?

Substantial transformation generally means the processing creates a new and different article with a new name, character or use; simple operations such as repacking, relabelling or minor assembly usually do not qualify.

The test comes from decades of US court decisions and CBP rulings rather than a single formula. In practice, CBP looks at what happened to the goods in the country claimed as origin and asks whether the article that came out is fundamentally different from what went in. Factors that tend to support a change of origin include manufacturing from raw or semi-finished materials, complex assembly involving many parts and real engineering, processes that change the physical or chemical nature of the material, and significant value, skill and investment in the processing country.

Factors that tend to work against a change of origin include:

• Repacking, relabelling or re-marking goods.
• Simple assembly of a kit of imported parts, especially when the key components that give the product its character come from elsewhere.
• Minor finishing, such as cleaning, painting, cutting to length or adding accessories.
• Splitting, combining or sorting shipments.
• Storing goods in a Thai warehouse or free zone and re-exporting them.

The result depends on the facts of each product. A Thai plant that moulds, machines and assembles most of a product from materials may well create Thai origin; a plant that receives nearly finished units and adds a power cord and a box probably does not. Many cases sit in between, and that grey zone is where most disputes arise.

When the answer is not clear, the US offers a way to get certainty: an importer can request a binding ruling from CBP before shipping, describing the materials, their origins and the processing. Published rulings are searchable in CBP's online rulings database, and reading rulings on similar products is a useful way to understand how CBP thinks about your industry.

What is transshipment, and why is it a risk for Thai exporters?

In this context, transshipment means routing goods made in one country through another country, sometimes with minor processing, so they can be declared with a false or misleading origin to avoid duties; it puts the exporter, the importer and honest competitors at risk.

Shipping professionals also use transshipment in a neutral sense, to mean moving cargo from one vessel to another at a hub port. That is normal and lawful. The problem described here is different: using a third country to disguise origin.

The risk for Thailand comes from its position in regional supply chains. Thailand imports large volumes of components and materials from other Asian economies and exports finished goods to the US. Most of that trade is legitimate manufacturing. But when US duties on one country's goods are higher than on Thai goods, there is an incentive for some operators to route products through Thailand with little or no real processing, or to overstate how much work is done here.

When US authorities suspect that is happening for a product category, the consequences spread. CBP may increase scrutiny of all shipments of that product from Thailand. Honest exporters face more information requests, slower clearance and buyers who ask for more proof. In some cases, US trade measures can be extended to cover products from the third country if the US finds that circumvention is taking place.

For Thai exporters, the practical message is simple: being genuinely Thai is not enough on its own; you need to be able to prove it, quickly and in detail, when asked.

How does US Customs detect and investigate transshipment?

CBP uses trade data analysis, allegations from industry, information requests to importers and foreign producers, on-site verification and cooperation with foreign governments to test whether declared origin is true.

CBP has several tools. It analyses import data for patterns that suggest a shift in origin without a matching shift in production, such as a sudden jump in imports of a product from one country after duties on another country's goods rise. It receives allegations from US producers and other interested parties. It can send formal requests for information to the importer, asking for documents that show where and how the goods were made, and can seek information from the foreign producer and exporter.

For anti-dumping and countervailing duties, the Enforce and Protect Act, enacted as Title IV of the Trade Facilitation and Trade Enforcement Act of 2015, gives CBP a formal process for investigating evasion. According to CBP, interested parties can submit an allegation that an importer is evading those duties; CBP can collect information from the importer, the foreign manufacturer or exporter and the foreign government, and can verify information on site. CBP can take interim measures while it investigates, and its determinations are subject to administrative review and appeal to the US Court of International Trade.

Outside EAPA, CBP can question origin on any entry. It can ask for evidence, examine goods, and issue decisions on origin and marking. Under EAPA it can also seek information from the foreign government, so Thai agencies may be asked about a shipment.

What this means in practice: if your goods are flagged, the questions will arrive through your US importer, usually with a deadline. The importer will need you, as the Thai manufacturer or exporter, to provide production evidence quickly. Exporters who keep organised records can respond; those who have to reconstruct the history of a shipment after the fact often cannot.

What are the consequences of a wrong origin claim?

Consequences can include paying the higher duties that should have applied, interest, civil penalties under US customs law, and, in serious cases, punitive duties, exclusion of goods or criminal investigation, as well as lost customers.

If CBP decides that goods declared as Thai actually originate elsewhere, the importer can be required to pay the duties that would have applied to the true origin, including any anti-dumping, countervailing or other additional duties. Under EAPA, CBP can take interim measures such as requiring cash deposits on further entries while it investigates.

US customs law also provides civil penalties for entering goods by means of false or misleading statements or material omissions, under 19 U.S.C. 1592, with the level depending on whether the violation is found to be negligent, grossly negligent or fraudulent. In serious fraud cases, criminal investigation is possible.

At the policy level, the US has also used tariff measures aimed directly at transshipment. Executive Order 14326 of July 31, 2025, which modified the reciprocal tariff rates, provided for a punitive additional duty on goods that CBP determined had been transshipped to evade applicable duties, on top of other duties and penalties under 19 U.S.C. 1592, and directed periodic identification of countries and facilities used for circumvention. In February 2026, the White House issued an order ending certain duties imposed under emergency economic powers. Because the status of the related transshipment provisions and of other tariff measures can change, confirm the current position with a US customs broker or trade lawyer; this article does not state current rates.

The commercial consequences often hurt more than the legal ones. US buyers who face origin investigations tend to cut suppliers who cannot document their production, and may impose tougher audit clauses across a whole sourcing country.

What does Thailand's Department of Foreign Trade require for US-bound certificates of origin?

Since November 2019, Thailand's Department of Foreign Trade (DFT) has tightened issuance of general certificates of origin for watch-listed goods exported to the US and the EU, asking manufacturers for a factory licence and a raw-material declaration and asking traders for a manufacturer's confirmation.

Because there is no free trade agreement between Thailand and the US, a certificate of origin for US-bound goods is a non-preferential, general certificate. It does not reduce US duty by itself, but US buyers often ask for one as part of their origin evidence, and it carries the weight of a Thai government check.

The DFT announced that, from 1 November 2019, it would tighten issuance of general certificates of origin for goods on a watch list that are exported to the US and the EU, to prevent the use of Thailand to disguise origin. Under the DFT's notice, manufacturers applying for a certificate must show a factory operating licence and a raw-material declaration form, and exporters who are not the manufacturer must also attach a letter from the manufacturer confirming the sale, together with that form. The DFT publishes the forms through its electronic services, and it notes that the list of watched goods can be updated. The DFT also operates an online system, ROVERs PLUS, through which exporters submit cost and origin information for checking.

Because the watch list and procedures can change, confirm the current requirements for your product with the DFT before you apply; the DFT's hotline is 1385. Our guides to applying for a certificate of origin and to the types of certificate of origin explain the general application process.

The DFT checks are useful for honest exporters: a certificate issued after a real factory and materials check is stronger evidence than one issued on declarations alone. But they do not replace your own records, because US customs decides origin under US rules.

What records should Thai exporters keep to prove origin?

Keep a complete origin file for each product and shipment: bill of materials with the origin of every input, supplier and import records, production records, factory and machinery evidence, a cost build-up showing value added in Thailand, and the certificate of origin.

The goal is to be able to show, quickly and convincingly, that the goods were made in Thailand in a way that meets US origin rules. A useful origin file contains:

• Bill of materials. Every component and material, with supplier, country of origin and cost. Highlight the components that give the product its essential character.
• Purchase and import records. Supplier invoices, Thai import declarations for imported materials, and purchase records for local materials.
• Production records. Work orders, production logs, process flow charts, quality records and, where helpful, photos or video of key processes.
• Factory evidence. Factory licence, machinery list, floor plan, headcount and shift records, showing the plant can actually produce the volumes shipped.
• Cost build-up. A breakdown of material, labour and overhead cost, showing the value added in Thailand.
• Shipment link. A clear link between production batches and each export shipment: invoice, packing list, export declaration and bill of lading.
• Origin documents. The certificate of origin and any DFT supporting forms, and any CBP ruling the importer has obtained.

Keep these records organised and retrievable for several years; US customs can review entries well after the goods have been delivered, and your importer will rely on you. Record-keeping obligations differ in Thailand and the US, so confirm retention periods with your advisers.

For Chinese-invested factories in Thailand, the bill of materials and cost build-up deserve particular care, because they are where reviewers look first when inputs come mainly from China.

How should Thai manufacturers and their US importers work together on origin?

Agree origin responsibilities in the contract, share evidence before the first shipment, and consider a CBP binding ruling for products where origin is not clear-cut.

US law places the declaration responsibility on the importer of record, but in practice the importer depends on the Thai supplier for the facts. Good practice is to agree, in the supply contract, that the supplier will provide origin documentation on request within a set time, allow audits or site visits, and notify the importer of any change in materials, suppliers or processes that could affect origin.

Before the first shipment of a new product, share the bill of materials and process description with the importer and their customs broker so they can assess origin under US rules. Where the answer is uncertain, the importer can request a binding ruling from CBP. That takes time, but a favourable ruling gives both parties a firm basis for future shipments, as long as the facts stay the same.

Marking matters too. Goods must generally be marked with their country of origin in a way the US end buyer can see. If origin is Thailand, marking should say so; if origin is another country, marking must reflect that. Mismatches between marking, invoice and declaration are a common trigger for questions.

Finally, review origin whenever something changes: a new supplier for a key component, a process moved to another plant, or a new product variant. Origin is not decided once and forgotten; it follows the facts of production.

How can a freight forwarder help with origin risk?

A forwarder cannot decide origin, but it can keep shipment documents consistent, flag mismatches before cargo sails, and connect you with customs brokers and advisers on both sides.

Origin is a legal question for the importer, the exporter and the customs authorities, and serious cases need a US customs broker or trade lawyer. A freight forwarder's role is narrower but useful. It can check that the invoice, packing list, certificate of origin, export declaration, marks and bill of lading tell the same story; that the shipper and manufacturer named on the documents match the evidence; and that nothing in the routing creates avoidable questions, such as unexplained stops or changes of documents in a third country.

Thai Global Freight (TGF) can review document consistency for US-bound shipments, coordinate export customs and certificate-of-origin applications through licensed brokers, and keep shipment records organised so you can retrieve them if an importer or authority asks. For the wider picture on shipping to the US, see our guide to shipping from Thailand to the USA, and for post-shipment risk on the Thai side, our guide to post-clearance audit in Thailand.

The simplest protection remains the same: make the product in Thailand in a way that genuinely transforms it, record how you did it, and be ready to show it.