What "Made in China" actually means

Summary

Planet Money: What "Made in China" Actually Means

Planet Money, hosted by NPR, delves into the intricate world of economics, unraveling complex topics to help listeners understand the forces shaping their lives. In the episode titled "What 'Made in China' Actually Means," released on May 7, 2025, the podcast explores the nuances of country of origin labeling, its implications on international trade, and the challenges businesses face amidst evolving tariff policies.

1. Introduction to Maureen Thorson

The episode introduces Maureen Thorson, a unique blend of a poet and one of America's top international trade lawyers. Maureen's dual expertise allows her to approach trade law with a philosophical perspective, questioning the very essence of products and their origins.

“As a poet, Maureen often finds herself puzzling over, you know, the fundamental nature of things like what makes a chair a chair or a hat a hat, what makes this this and that that.” (01:17)

2. The Significance of Country of Origin

At the heart of the discussion is the country of origin—a label that has profound implications for businesses, especially in the context of tariffs. Following President Donald Trump's executive order in 2025 to impose hefty tariffs on Chinese products, the determination of a product's origin became crucial for businesses to avoid substantial financial penalties.

“Whether something is a product of Canada or Germany or China could soon mean the difference between no tariffs or 20% tariffs or more than 145% tariffs.” (03:12)

3. Understanding U.S. Country of Origin Rules

The United States employs a distinct set of rules to determine a product’s country of origin, differing significantly from other nations.

• American Products ("Made in USA"): To label a product as "Made in USA," it must be entirely American in terms of parts, ingredients, and labor. Exceptions exist for certain categories like clothing and specific meats.

  “Made in USA means this is pretty much fully USA, down to the soles of its little American shoes. And it doesn't have almost any foreign material in it.” (06:27)

• Imported Products ("Product of [Country]"): Any product imported into the U.S. must display its country of origin, a requirement dating back to an 1890 law aimed at informing consumers.

  “You can think of country of origin as kind of like a product's citizenship.” (07:57)

4. The Substantial Transformation Test

Central to U.S. regulations is the Substantial Transformation Test, which determines a product's origin based on where it underwent a significant change.

“A substantial transformation is processing from which the article emerges with a new name, use or character.” (11:21)

Historical Applications:

• 1908 Corks Case: The Supreme Court ruled that merely cleaning and stamping corks did not change their origin from Spain to the U.S. because there was no substantial transformation.

  “They started out as corks, and they were still corks here in the US.” (13:28)

• 1940s Hairbrushes Case: Adding bristles to Japanese wooden handles in the U.S. was deemed a substantial transformation, making the final product "American."

  “The judge said there is a substantial transformation here. What you now have is an American hairbrush.” (15:19)

• 1980s Uniroyal Boat Shoes Case: Despite assembling Indonesian uppers with American rubber soles, the court ruled the shoes remained Indonesian products because the essence of the shoe—the leather uppers—originated from Indonesia.

  “According to the judge, the essence of the shoe was not substantially transformed and it remained a product of whatever country that upper came from.” (18:29)

5. Modern Challenges: The Sticky Note Dilemma

In 2020, Staples faced a perplexing issue determining the origin of their sticky notes. Despite multiple countries involved in the production process—Japan or Indonesia for paper, Taiwan for glue, and China for assembly—U.S. Customs classified the sticky notes based solely on the paper's origin.

“When you get down to it, we think that the essence of a sticky note is really the paper.” (21:44)

This ruling ignited debates about the Substantial Transformation Test's applicability to modern, complex supply chains, highlighting its limitations in addressing products with multifaceted origins.

6. The Impact of Trump's Tariffs

Trump's administration intensified the focus on country of origin, especially concerning Chinese products. Businesses scrambled to redefine their manufacturing processes to mitigate tariff obligations. Maureen Thorson became a critical advisor for companies navigating these turbulent changes.

“The substantial transformation test is still, by and large, the law of the land in the U.S. for one, this is just the way we've always done it.” (25:07)

7. Future Directions and Free Trade Agreements

The podcast touches upon how individual free trade agreements require more precise origin determinations compared to the broad Substantial Transformation Test. These agreements often mandate specific rules based on labor contributions, value of parts, or key manufacturing processes.

“Depending on the product, the Rules might have to do with how much labor came from a country, or the value of the parts that came from a country, or even whether a key chemical reaction happened in a given country.” (24:43)

8. Conclusion: Navigating a Complex Landscape

As global manufacturing becomes increasingly intricate, the traditional methods of determining product origins face significant challenges. Companies rely heavily on legal experts like Maureen Thorson to interpret and navigate these complexities, ensuring compliance and financial viability in an ever-evolving trade environment.

“Lawyers who can, you know, wax poetic about the real, deep down essences of things. This episode of Planet Money was produced by James Sneed...” (27:18)

Key Takeaways

• Country of Origin Matters: Especially in contexts with significant tariffs, understanding where a product is deemed to originate is crucial for businesses.

• Substantial Transformation Test: This U.S. standard focuses on the last substantial change in a product's name, use, or character to determine its origin.

• Complex Supply Chains: Modern manufacturing, involving multiple countries and stages, complicates origin determination, often leading to legal ambiguities.

• Evolving Legal Landscape: Free trade agreements and changing administration policies continue to shape how countries enforce origin-based regulations.

Notable Quotes

• “A substantial transformation is processing from which the article emerges with a new name, use or character.” – Maureen Thorson (11:21)

• “When you get down to it, we think that the essence of a sticky note is really the paper.” – Customs Official (21:44)

• “What makes a Chinese product Chinese and when does it stop being Chinese?” – Maureen Thorson (03:12)

Conclusion

This episode of Planet Money illuminates the often-overlooked complexities behind a simple label like "Made in China." Through expert insights and historical contexts, listeners gain a deeper understanding of international trade laws, the intricacies of supply chains, and the profound impact of globalization on everyday products.

For more insightful episodes and in-depth economic analyses, consider subscribing to Planet Money+.

Transcript

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[Host]

This is Planet Money from npr.

[Maureen Thorson]

Maureen Thorson is a poet. She's published three books of poems. She's been featured in fancy literary journals from the Horseless Review to Plowshares.

[Host]

If you ask poets if they're having fun writing poetry, I think you would get very mixed reactions. I'm not sure we do it for fun in the typical sense of fun.

[Maureen Thorson]

As a poet, Maureen often finds herself puzzling over, you know, the fundamental nature of things like what makes a chair a chair or a hat a hat, what makes this this and that that.

[Alexi Horowitz Ghazi]

And asking those questions is kind of.

[Jeff Guo]

Her job, but not just because she's a poet. You see, Maureen also happens to be one of the top international trade lawyers in America, sort of poet by night.

[Alexi Horowitz Ghazi]

Trade lawyer by day.

[Maureen Thorson]

So you're like Hannah Montana basically, like. But I don't know which part is Miley Cyrus.

[Host]

I don't know.

[Maureen Thorson]

Either is the trade lawyer part the Hannah Montana part, and then the poet part is one or the other.

[Host]

I'm not sure.

[Jeff Guo]

As an international trade lawyer, Maureen helps companies navigate the complicated world of tariffs, a world that is also full of questions about what makes this this or that that.

[Host]

Pretty famous ones are our X Men dolls or toys.

[Maureen Thorson]

I think we did an episode on that.

[Host]

Our hockey pants, clothing or equipment, our certain cough drops. Are they candy?

[Maureen Thorson]

Okay, so the answers, by the way, are that most X Men are toys, hockey pants are considered sports equipment and cough drops. Well, it actually depends on the ingredients.

[Host]

Some of these questions really get. I mean, you can it kind of feels like you're staring into the void and it's staring back and whispering at you. Is it?

[Maureen Thorson]

Recently, the questions vexing Marine have taken an even stranger and more philosophical turns. Maureen's clients, CEOs at companies big and Small have been asking her about where things come from, their national identity, their country of origin. Like what makes a Canadian product Canadian or a German product German? Or especially what makes a Chinese product Chinese? And when does it stop being Chinese?

[Jeff Guo]

For Maureen's clients, those questions matter now more than ever. On April 2, President Donald Trump announced his plan to put big new tariffs on dozens of countries. And we caught up with Maureen just a couple days later.

[Host]

Oh, man. The past 48 hours have been completely bonkers. I am the human equivalent of a computer with 90 browser tabs open. So if I seem a bit dazed, I am dazed.

[Maureen Thorson]

That's why Maureen's clients have been bombarding her with questions, because millions of dollars are at stake. Whether something's a product of Canada or Germany or China could soon mean the difference between no tariffs or 20% tariffs or more than 145% tariffs. These tariffs all depend on a product's country of origin.

[Jeff Guo]

But figuring out something's country of origin is far from simple.

[Host]

So US Law is very unique in its approach to country of origin.

[Maureen Thorson]

What's the part that is shocking to.

[Host]

People that there's not a nice bright line, one size fits all origin test?

[Alexi Horowitz Ghazi]

For example, imagine you take peanuts that were grown in China, ship them to a factory in Brazil and grind them into peanut butter. Is that peanut butter a product of China, or has it become a product of Brazil?

[Maureen Thorson]

Maureen says people often assume that there must be some logical method, like maybe just compare the costs of the ingredients and the labor that come from each different country or something. And she has to tell them, oh, no, the way we do it in the United States is a lot weirder, a lot more confusing, and a lot more unpredictable. Hello and welcome to Planet Money. I'm Jeff Guo.

[Alexi Horowitz Ghazi]

And I'm Alexi Horowitz. Ghazi.

[Jeff Guo]

Virtually everything that's imported into the United States by law must have a so called country of origin, the place where it officially came from. And figuring out that country of origin matters because that's what customs goes by when it's enforcing tariffs.

[Maureen Thorson]

Today on the show, when you buy something at the store and it says made in China or made in France or made in the usa, what does that actually mean? How much of it actually came from China or France or the usa? And in this age of supply chains that crisscross the world, does our system even make sense anymore? Take any object that might be around you. I mean it like a pencil, a TV remote, a pair of earbuds. Hold it in your hand and look Closely, Chances are you're going to see a little label. Maybe it's engraved, maybe it's printed that says Made in China or Made Made in Malaysia or Made in usa. Maureen says her clients are often surprised to find out that those words can mean very, very different things. There are actually two sets of rules here. One for American products and one for products from the rest of the world.

[Jeff Guo]

So let's start with the rules for American products. When something says it's made in usa, that doesn't just mean that it's manufactured in the United States. It also means that virtually all of the parts and ingredients and labor came from the usa.

[Host]

Made in USA means this is pretty much fully usa, down to the soles of its little American shoes. And it doesn't have almost any foreign material in it.

[Jeff Guo]

There are some exceptions for things like clothing and some types of meat. But basically, if an American product isn't 100% American, it cannot say made in the USA.

[Maureen Thorson]

This is why you sometimes see things that say assembled in America with foreign parts. But for American products, there is also the option to just not have a label at all. So when you go to the store, you might notice some products that don't tell you where they come from.

[Host]

I see it a lot with sort of cosmetic adjacent goods like shampoos. My assumption is they are actually making the shampoo in the United States, but they're probably importing fragrance from abroad and other things.

[Maureen Thorson]

Yeah, these are American products. They're just not 100% American, so they can't use the Made in USA label.

[Jeff Guo]

The rules are very different for products that are not American. Basically anything that's imported has to be labeled with the main country it came from, its so called country of origin. That's been the law since 1890, when Congress wanted consumers to know where their imported products were coming from. So those labels that say product of China or product of France, they are not optional.

[Maureen Thorson]

You can think of country of origin as kind of like a product's citizenship. But in the US how we determine that country of origin can be wildly counterintuitive. It's not necessarily where that product got on the container ship to come here. It's not necessarily where most of its ingredients are from or even where most of the manufacturing happened.

[Host]

You can have products, including fairly sophisticated products, where most of the components and the assembly is all happening in China, but the product is not deemed Chinese under US Laws.

[Jeff Guo]

Maureen has helped companies import a lot of different products. She's not allowed to say exactly what she's worked on, but it's things like industrial engines and smartphones and also flower pots. She helps companies figure out that product's country of origin, get it labeled right, and declare it to customs.

[Host]

This is something that a lot of importers are confused about. U.S. customs doesn't have some kind of giant list of all the products in the world with a big, you know, chart of their origins and their tariff classifications.

[Maureen Thorson]

Wait, they don't?

[Host]

No, they don't.

[Maureen Thorson]

And when you seems like that's their job.

[Host]

No, that's your job, Mr. Importer.

[Maureen Thorson]

So you have to self declare.

[Host]

You do. And then customs can come back and say, hey, so I noticed this particular product, you know, was shipped out of Thailand, but you claimed it as Japanese. Prove it.

[Jeff Guo]

Now, we should say for many years, companies didn't think too, too hard about country of origin. Most of the time, what you labeled something or what you declared to customs didn't matter that much because for most countries, tariffs didn't really differ that much.

[Maureen Thorson]

But then Donald Trump was elected president for his first term, and country of origin suddenly started to matter a lot because in 2018, Trump put big tariffs on lots of Chinese products. And how does customs determine what is a Chinese product? Well, it's anything whose country of origin is China. That is when Maureen's phone started ringing off the hook.

[Host]

So suddenly companies were coming in and saying, well, I do do some manufacturing in China, but a lot of my parts are coming from outside of China, or I'm really only thing to China for packaging or testing. Do I still have to pay duties on this as a product of China, even though, I mean, I'm exporting it from China, but am I really making it in China?

[Jeff Guo]

Other companies were trying to switch up their manufacturing so their products wouldn't count as made in China anymore. They're asking Maureen, how much can I bend the definition of made in China?

[Host]

If I move some or all of my manufacturing operations from China to Malaysia or China to Vietnam, how much do I have to move before the goods will no longer be considered Chinese by US Customs and I don't have to pay duties on Chinese products?

[Maureen Thorson]

And whenever clients ask marine questions like this, which they are doing more and more these days, she has to take a deep breath, sit them down, and say, okay, here is how we determine a product's country of origin. There's one main rule in the US it is called the substantial transformation test, and it says a product gets its country of origin from the last place where it went through a substantial transformation.

[Host]

A substantial transformation is Processing from which the article emerges with a new name, use or character.

[Maureen Thorson]

Are you literally quoting this test?

[Host]

I believe I am. I have had some memorized it word for word. I am intimately familiar with this phrasing.

[Jeff Guo]

A new name, use or character. That is the entire rule. And the way it works is if you send something to, say, Vietnam, and there you change it enough that you're basically turning it into a new thing, you're giving it a new name, use or character, then that thing now counts as a product of Vietnam.

[Host]

A new name, use or character. Wow, that's super easy to say. But as you try to apply it to everything in the universe, from lawn chairs to fruit salad to a bottle of aspirin, you get into some philosophical questions about the thingy ness of things. Where is the fruit salad ness of a fruit salad imparted to the fruit salad? Oh, okay.

[Maureen Thorson]

Marine says to really understand the substantial transformation test, you have to understand where it came from and the history of how courts and customs officials have tried to apply it. For that, we called up someone who is an expert in this history. He's kind of a legend of trade law. His name is Larry Friedman, and Maureen actually knows him pretty well.

[Host]

Hey, Larry. I just had emails with Larry today.

[Maureen Thorson]

Did you really?

[Host]

Yeah. He's so nice about answering my emails. And I try to repay that kindness by not emailing him unless I am like, I am so genuinely stumped.

[Maureen Thorson]

Wait, so is Larry like your Yoda?

[Host]

I think he's kind of like a universal Yoda for the customs bar.

[Larry Friedman]

That's a funny. That is a funny thing. I did tell her the other day there is no try, there is only do. No, I did not say that.

[Maureen Thorson]

Larry is a longtime trade lawyer. He's taught trade law at the University of Illinois and he co wrote the textbook on customs law.

[Alexi Horowitz Ghazi]

Larry says the origin of the substantial transformation test was this supreme court case from 1908 involving corks.

[Jeff Guo]

A U.S. company was importing corks from Spain, cleaning them up a bit, stamping on a logo.

[Alexi Horowitz Ghazi]

And the Supreme Court said, that is not a substantial transformation because cleaning up the quarks did not give them a new name. It didn't change how they were used.

[Jeff Guo]

And it didn't really even change their character.

[Alexi Horowitz Ghazi]

They started out as quarks, and they were still quarks here in the US.

[Maureen Thorson]

This Supreme Court quark case created the idea that in order for something to really be transformed, you have to give it a new character or name or use. Is. Is that phrase new character, name or use? Is that Just like tattooed on your heart.

[Larry Friedman]

It is. It is embedded in my brain. It'll probably be tattooed on me someplace sometime.

[Maureen Thorson]

Or just put it on your tombstone. I don't know.

[Larry Friedman]

Put that in my will. Here. Here lies Larry with a new name, character, and use.

[Maureen Thorson]

Oh, no. I'm sorry. It took us there.

[Alexi Horowitz Ghazi]

To tell the story of how the thinking around name, character, and use has evolved over the decades, we're going to walk through three examples. The first one is from the 1940s, and it involves hairbrushes.

[Larry Friedman]

A company in the US made brushes, so they imported wooden handles from Japan. The handle had no bristle on it. In the United States, they put the bristles on and it became a brush.

[Maureen Thorson]

Now, customs wanted the company to call these hairbrushes Japanese because the majority of the brush was the wooden handle, which came from Japan. But the company disagreed. So the question for the court was, did the simple act of adding bristles to that wooden handle transform it into an American hairbrush?

[Alexi Horowitz Ghazi]

That's going to be a big yes for me, Doug. Look, this thing's getting a new name, a character, and a new use. You can't just use some block of wood to brush your hair. Come on.

[Maureen Thorson]

Right. And that is exactly what the judge said. The judge said there is a substantial transformation here. What you now have is an American hairbrush. And Larry says this hairbrush case shows you how even a basic manufacturing step like gluing some bristles on can change a product's country of origin.

[Alexi Horowitz Ghazi]

But by the 1980s, manufacturing was getting way more complicated. You could argue that any step in.

[Jeff Guo]

The process changed a product's name, character, or use.

[Alexi Horowitz Ghazi]

So where would courts draw the line? All of this came to a head.

[Jeff Guo]

In a fight over boat shoes.

[Alexi Horowitz Ghazi]

That's coming up after the break.

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[Maureen Thorson]

At how modern manufacturing works these days, it's hard to pinpoint exactly where. Where a thing even becomes a thing, because most things are manufactured in many different steps scattered across the world.

[Alexi Horowitz Ghazi]

Yeah, a smartphone might be made out of parts from dozens of countries, and those parts themselves are made up of other, smaller parts from dozens of other countries. All of which makes the process of trying to figure out something's country of origin incredibly tricky.

[Maureen Thorson]

In the 1980s, courts were just starting to confront this confusing new reality in a case about boat shoes, specifically Sperry Topsiders. You know, those preppy looking leather shoes with the, with the rubber sole, the company making those shoes, they were getting the upper half from Indonesia.

[Larry Friedman]

The upper included everything that you see basically above the sole of the shoe. So it was kind of like a sturdy sock with like, it's a shoe.

[Maureen Thorson]

But without like the rubber part then makes you able to use the shoe as an implement to walk on, basically.

[Larry Friedman]

Exactly.

[Maureen Thorson]

The company would take those leather uppers and then in the United States, glue and stitch on the rubber soles. And the question was, did that count as a substantial transformation? Did the act of attaching soles onto those uppers turn them into American shoes, or was the finished shoe still a product of Indonesia?

[Alexi Horowitz Ghazi]

Well, based on the hairbrush case we talked about, it seems like you wouldn't have a functioning shoe here until you glued on that sole the step. That would create a change in the name and use and character, right?

[Maureen Thorson]

Yes, right. But no. The court said what is happening here in the US Is just too simple. They were like, you're just assembling these pre made parts. The real work to make the shoe, the complicated process of cutting and sewing all this leather that happened in Indonesia. So this shoe, even though you finished it in the US has to be labeled as an Indonesian shoe.

[Alexi Horowitz Ghazi]

The name of this big boat shoes case was Uniroyal. And Larry says Uniroyal spread the idea that a substantial transformation involves more than just giving something a new name or character or use. You might have to change something's essence.

[Larry Friedman]

According to the judge, the essence of the shoe was not substantially transformed and it remained a product of whatever country that upper came from.

[Maureen Thorson]

Maybe I misunderstand what a shoe really is, and if so, that's on me. That's my bad. But if the shoe doesn't have the sole, if it doesn't have the literal, like rubber or whatever that protects your feet from the harsh realities of the ground, then it's not a shoe.

[Larry Friedman]

Yeah, you're right. I think Uniroyal is not a good decision.

[Maureen Thorson]

Yeah, Larry's not the only one who thinks this was not a good decision. But the boat shoes case set a really influential precedent. As manufacturing has gotten more complicated, courts and customs officials have focused more and more on what is the essence of a product and when does that change. And you could see this maybe as a more stringent way of looking at a product's character. So it's no longer enough to just change a product's character. You have to change something essential about its Character.

[Jeff Guo]

These days, you can build an entire laptop in China, where most of the parts and labor come from China. But if the motherboard is from Vietnam.

[Alexi Horowitz Ghazi]

Customs might say that laptop is actually.

[Jeff Guo]

Vietnamese because the essence of the laptop is in the motherboard.

[Maureen Thorson]

So what is the essence of something? What is the essence of anything? This is the new question at the heart of the substantial transformation test. And it's now creating all kinds of strange puzzles. Like in our final example, which involves sticky notes. You know, like post its pads of paper, you peel off a sheet and stick it to the wall, stick it to the fridge, stick it to your forehead.

[Alexi Horowitz Ghazi]

Yes.

[Jeff Guo]

And this sticky, sticky note situation happened back in 2020. This was shortly after Trump put a bunch of tariffs on products from China and Staples. The office supply company was trying to figure out what is the country of origin of our sticky notes. Like, do we have to pay the tariffs on China?

[Maureen Thorson]

And Staples was wondering this because they had a whole multinational plan for manufacturing these sticky notes. First, they would start with the paper, a jumbo roll about three feet long. And this would come from either Japan or Indonesia. Then the sticky stuff, a special patented glue, and this would come from Taiwan. Finally, the assembly a machine would unspool that giant roll of paper, apply the glue, cut the paper into sheets, and out would come the post. Its all these final steps would happen in China.

[Alexi Horowitz Ghazi]

And the decision that Customs came to about where the sticky notes were last, substantially transformed. It really threw us for a loop. So we asked Maureen Thorsen to help us make sense of their logic.

[Host]

I'd actually read that ruling before, so I was like, oh, the sticky note one. Okay, okay, yeah, sticky, sticky notes.

[Maureen Thorson]

So in this ruling, Customs wrestled with the question of what is the essence of a sticky note? Is it the paper that you write on, is it the glue that makes it sticky? Or is a sticky note not really a sticky note until you put the glue and the paper together?

[Alexi Horowitz Ghazi]

Yeah. I'm gonna go out on an obvious limb here and say that it seems like the essence of a sticky note is like the meeting of paper and glue. It's like the moment where the paper and the glue come together.

[Maureen Thorson]

Right. I feel like that is what most people would say. And yet here is what Customs decided they said. When you get down to it, we think that the essence of a sticky note is really the paper.

[Host]

The sticky note kind of started its life as paper, it ends its life as paper, and it's not particularly heavily processed paper. And so the underlying material is really what's important here. And that's paper and the paper is the jumbo roll.

[Maureen Thorson]

Okay, but, but Maureen. Yeah, I have a piece of paper right here. Yes, I have a piece of paper right here. Okay. It's not a sticky note. It's just a piece of paper. And look, it's not sticking. It's not sticking. It's not sticking to the wall.

[Host]

Yeah, that's the goofy bit about the sticky notes ruling is, I think it is a perfectly rational point of view to say the sticky noteness of a sticky note is the sticky bit. You know, that's what makes. So putting glue on it should be what's substantially transformative.

[Alexi Horowitz Ghazi]

But customs did not see it that way. And partly they were thinking, well, is it that big of a deal to just cut up some paper and add glue to it?

[Jeff Guo]

We should be focused on the more complicated step of actually making the paper because the paper is the essence of a sticky note.

[Host]

So the sticky note ruling is a bit unusual, but if you dig into their logic, I think they were persuaded by the fact that what do you use a sticky note for? To write on, like, paper, because it's made of paper. So it's the paper that is important here. The stickiness is a bell and whistle to the sticky note, not the essence of the sticky note, not the character of the sticky note. Even as you're scratching your head and going, but it's sticky, sticky note.

[Maureen Thorson]

So according to customs, the country of origin of these sticky notes would not be Taiwan, where the glue came from. It wouldn't be China, where. Where the roll of paper would, you know, actually get chopped up and glued up and turned into sticky notes. No, customs said these sticky notes would be considered products of the country where the original paper came from, either Japan or Indonesia. So staples would not have to pay the tariff on Chinese products. The sticky note case really shows you what has happened to the substantial transformation test, how unpredictable it can be nowadays, because more than ever, courts and customs officials are asking these weird philosophical questions like, what is the essence of a sticky note? When does a sticky note become its true self? Questions that are hard to answer in any kind of consistent way, which can land you in some pretty absurd places.

[Alexi Horowitz Ghazi]

And there is another way to do this. Whenever we sign individual free trade agreements with other countries, they will often insist on not using our weird, loosey goosey substantial transformations.

[Jeff Guo]

For our free trade deal with Canada and Mexico, we had to agree on a new system with a whole compendium of extremely specific rules for determining a product's country of origin.

[Alexi Horowitz Ghazi]

Depending on the product, the Rules might have to do with how much labor came from a country, or the value of the parts that came from a country, or even whether a key chemical reaction happened in a given country.

[Maureen Thorson]

Now, there are a few reasons why the substantial transformation test is still, by and large, the law of the land in the U.S. for one, this is just the way we've always done it. And the test is really flexible. It doesn't require any complicated accounting or record keeping or compendiums of rules.

[Jeff Guo]

But also, country of origin just didn't matter as much in the past. For decades, our tariffs treated most countries more or less the same. But recently, that has all started to change. Since April, Maureen's been on the phone with her clients at all hours, trying to explain to them our weird and wacky system of determining country of origin.

[Maureen Thorson]

What's the reaction from your clients when they're like, Maureen, can you just tell me what country of origin is this product? And you're like, oh, hold on, there's a whole.

[Host]

Yes.

[Maureen Thorson]

What is their reaction?

[Host]

It really depends. Everything from stunned disbelief where the reaction was. It can't possibly work like that. That can't possibly be right. To, okay, let's figure it out.

[Maureen Thorson]

Marine figures it out by talking to the engineers, asking for design sketches, getting a whole list of materials, and then she sees if she can try to make an argument for whatever country she thinks the country of origin is. For companies trying to avoid China as their country of origin, Marine might help them figure out how much of their manufacturing they actually to move out of China. Or maybe they can keep making the product in China. They just have to get a key component, the essence of the product, from a different country. That's kind of the game these days. And lawyers like Maureen are in high demand. Lawyers who can, you know, wax poetic about the real, deep down essences of things. This episode of Planet Money was produced by James Sneed with help from Sylvie Douglas. It was edited by Jess Jiang, Fact checked by Sierra Juarez and engineered by Kwesi Lee. Alex Goldmark is our executive producer.

[Jeff Guo]

Special thanks to Bill Reinsch, Robert Shapiro, and Damon Pike. I'm Alexi Horowitz Ghazi.

[Maureen Thorson]

And I'm Jeff Guo. This is npr. Thanks for listening.