Taipei: Starting May 7, documents declaring the origin of products made in Taiwan for export to the United States will be required. This measure aims to prevent items produced elsewhere from using Taiwan as a transit channel to evade higher tariffs imposed by Washington, according to the International Trade Administration (ITA) of the Ministry of Economic Affairs (MOEA).

According to Focus Taiwan, exporters who fail to submit a signed declaration of origin will face a fine of up to NT$3 million (US$92,164), as per the ITA. In a statement, the ITA mentioned that after the Trump administration imposed varying levels of “reciprocal tariffs” on countries with a high trade surplus with Washington on April 2, there was a concern that manufacturers in other countries might exploit Taiwan to bypass these tariffs by altering the origin of their products.

Taiwan faces a 32 percent tariff, while other countries in the region have been subjected to higher levels, including 46 percent for Vietnam and 37 percent for Thailand. Following the announcement on April 2, the U.S. president declared a 90-day pause on the new tariffs on April 9, opting instead to apply a 10 percent baseline duty to most countries except for China, which faces tariffs as high as 245 percent on certain imports.

The ITA highlighted that the signed declaration of origin is expected to deter manufacturers in other countries from taking advantage of Taiwan by merely repackaging or reprocessing their products before sending them to the U.S. market. Failure to implement such measures could harm Taiwan’s international credit, reputation, and its prospects of negotiating a tariff reduction with the U.S.

The ITA stressed that the requirement for a signed declaration of product origin is not intended to restrict Taiwanese exporters. Instead, the agency hopes for cooperation from exporters to close any loopholes, thereby safeguarding Taiwan’s interests in international trade and economic development.

By referencing the Foreign Trade Act, the ITA warned that violators would face penalties including a warning, fines ranging from NT$60,000 to NT$3 million, and the most severe penalty – revocation of their exporter and importer licenses.

The ITA advised exporters to apply for an advance review of the origin of their products with the U.S. Customs and Border Protection (CBP) to protect their interests, given the differences in how product origin is determined in Taiwan and the U.S. Additionally, it suggested that Taiwanese companies should discuss the origin of products with their American buyers before shipping to the U.S. market.

The MOEA recently held a forum to assist approximately 3,000 Taiwanese exporters, including those in the machinery and machine tools industries, in understanding how to comply with these requirements. American lawyers specializing in product origin cases were invited to the forum by the MOEA to share insights on how the U.S. Customs determines product origin, which, according to U.S. lawyers, is usually assessed on a case-by-case basis.