Just Asking — how are we affected by US tariffs on Chinese goods?
Pago Pago, AMERICAN SAMOA — Since American Samoa controls its own borders — customs and immigration — how are we affected by the US tariffs on Chinese goods? Could we theoretically be used as an entry port that does not have these restrictions for goods to the US?
For example, the cannery buys fish caught by the Chinese, unloaded here or imported as loins, and then processed here — it then becomes US origin canned or packaged tuna/fish, when it is shipped to the U.S. So could aluminum, steel, electronic items, etc. also become US origin as long as they are unloaded here and then re-loaded with Pago the port of origin? Just asking…
Samoa News responds:
Two ASG officials contacted by Samoa News last week suggested that Congresswoman Aumua Amata, could provide thorough information, as this is a federal government issue and has been a very contentious one between the Trump Administration and the Chinese government. The ASG officials did note that American Samoa continues to keep close contact with its federal partners on trade issues that would impact the territory.
Responding to Samoa News inquiries, the Congresswoman provided the following response:
Products of China merely unloaded in American Samoa (or any other country) and then reloaded for export, would not escape the US tariffs against China.
The US tariffs against China are set under Section 301 of US law. Like most US tariffs, these 301 tariffs are based on the country of manufacture (a.k.a. “country of origin” or “COO”), not on the country of export or shipment. So, if a product is manufactured in China, and then merely transshipped through and/ or repacked in another country, then the proper COO remains China. And, the 301 tariffs still apply when the goods reach the US.
If a product is manufactured in China, and then further processed in a second country, there must be a significant amount of processing in that second country in order to change the COO.
The test in US law is called “substantial transformation” and is based on a total review of all the facts and processing steps (“a change in name, character, or use”). It is not based on any single standard, like a specific percentage of value added.
This same test in US law applies to most goods manufactured in most countries that are then shipped to the US — unless there is a special trade agreement like NAFTA, and then a different test applies.
So, for example, if an item is manufactured in Germany, and further processed in France, and forwarded to the US, the COO declared for US importation must be Germany, unless the importer can prove that the processing in France was enough to be considered a “substantial transformation” as defined by US Customs. And, if so, then the COO declared to the US at importation should be France.
The same is true for American Samoa. If a product of China is imported into American Samoa, and then shipped on to the United States, then the COO remains China (and the 301 tariffs still apply), unless the importer can prove that the processing in American Samoa meets the US Customs test for a “substantial transformation”. This is true of imports from almost any country coming to American Samoa and then on to the US.
Because the test is case-by-case and product specific, in order to know for sure whether a substantial transformation has occurred, a US importing company usually must review prior decisions by US Customs on similar products. US importers are required by US law to have files and work-papers in the company records, at the time of importation, to confirm the accuracy of the information declared, when making import declarations to US Customs.
If a company or person tries to cheat, by bringing goods to American Samoa, doing little or no processing, or merely repacking, and then shipping to the United States with a declaration of American Samoa as origin, then that company or person can be subject to seizure or forfeiture of the goods, civil penalties up to the full value of the goods, and even criminal penalties.