Cato Trade Expert: Addressing Transshipment Will Be 'Administrative Nightmare'
Former trade lawyer Scott Lincicome, who now leads the libertarian Cato Institute's trade division, said the administration learned the natural consequences of Section 301 tariffs when Chinese goods flow to India, Mexico and Vietnam as inputs to manufactured goods that are created in those countries.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
You're "still going to end up with the same Chinese content in the U.S. anyway," he said.
In response to a question from International Trade Today at the Cato Institute this week, he said, "Now, the big initiative is, well, we’re going to go after that Chinese content" with the language around "transshipment" in the brief descriptions of the Vietnamese and Indonesian trade deals.
"Good luck with that," he said, referring to the difficulty of identifying all the suppliers in complex manufactured goods' supply chains.
While he sees the transshipment language as a "potential excuse for just slapping a bunch of tariffs on stuff," he said, "How this is all going to shake out is a really important question. What are going to be the criteria?"
He called CBP's "substantial transformation" rule subjective, and wondered if the U.S. will move to an objective standard, such as requiring 50% Indonesian or Vietnamese content for a good to be classified as originating in those countries.
"Regardless of what they come up with, this is going to be an administrative nightmare," Lincicome said.
He said even if CBP assumes good faith, rather than guilty until proven innocent, just putting together the paperwork to file claims proving the origin of the goods will be onerous.
"The only clear answer is that the lawyers and the accountants are going to be buying beach houses in Delaware from all this," Lincicome said. "It is halcyon days for the trade bar."