Can You Fully Avoid U.S. Section 301 Tariffs If You Import Custom Metal Parts from Vietnam Instead of China?

A few years ago, I thought switching production from China to Vietnam would help us dodge U.S. tariffs completely. But I quickly learned: the rules aren’t that simple.

You can avoid Section 301 tariffs by sourcing custom metal parts from Vietnam only if the parts are genuinely manufactured and substantially transformed there. Otherwise, U.S. Customs may still classify them as Chinese origin, triggering Section 301 duties and possible penalties.

There’s no shortcut. Compliance starts with understanding how U.S. Customs defines “origin”—and how to prove it.

What qualifies as substantial transformation under U.S. customs rules?

One time, a supplier in Vietnam told me they could just do some basic welding on Chinese steel parts and label them as “Vietnam origin.” That was a red flag.

Substantial transformation means that the imported materials must undergo a significant manufacturing process that results in a new product with a different name, character, or use.

U.S. Customs Substantial Transformation Criteria

Basic processes like cutting, drilling, or assembling components do not qualify. Here are some real-world scenarios:

Examples That Do Not Qualify

• Attaching Chinese brackets onto a Vietnamese base
• Packaging or relabeling
• Minor assembly (e.g. screwing parts together)

Examples That Do Qualify

• CNC machining raw stock into final precision parts ¹
• Welding and shaping to form a new functional product
• Multi-step metal forming and surface treatment techniques ²

Unless your supplier is genuinely adding value through manufacturing, your parts might still be classified as Chinese origin—no matter where they ship from.

How do transshipment penalties apply to Vietnam-made products?

I once had a shipment detained because U.S. Customs suspected the parts were just Chinese castings with some final work done in Vietnam. We lost three weeks in customs clearance—and had to pay a penalty.

If Customs determines your goods are transshipped Chinese-origin products, they can apply a 40% penalty tariff, seize goods, or issue fines. See the CBP’s anti-circumvention guidance ³ for more details.

What Is Transshipment?

The key risk is origin misclassification. If you declare Vietnamese origin without sufficient evidence, you may be flagged for “circumvention.”

U.S. Customs and Border Protection (CBP) looks for:

• Common supplier address in China
• Shipment documentation inconsistencies
• Lack of Vietnamese factory evidence
• Historical patterns of routing through Vietnam

And once you’re flagged, all future shipments may receive additional scrutiny. That’s why proving real transformation is non-negotiable.

Are there legal ways to bypass Section 301 tariffs?

I often get asked: “Can we just ship through Vietnam and reclassify the parts?” Unfortunately, no—at least not legally.

There are no legal shortcuts to bypass Section 301 tariffs unless the parts are genuinely made outside China. Avoiding them requires legal origin change, not just shipping detours.

Legal Approaches to Avoid Section 301 Tariffs

You can’t just switch labels or rely on shipping origin. The product must meet the transformation threshold and be backed by reliable documents.

Customs officials use country-of-origin rules, HTS code analysis, and factory audit reports to verify claims. Misdeclarations lead to:

• Goods seizure
• Importer blacklisting
• Retrospective duties and penalties
• Legal investigations

For practical tips on audit documentation, see this third-party factory audit checklist ⁴.

So don’t guess—ensure compliance at the manufacturing source. You can also review the WCO Guide to Rules of Origin ⁵ for international best practices.

What documentation proves true Vietnamese origin?

Once, we submitted an origin declaration without supporting manufacturing records. The shipment was flagged, and we had to scramble to get factory evidence. Now we collect it upfront every time.

To prove Vietnamese origin, you need complete documentation linking materials, processes, and factory location.

Recommended Documentation Checklist

These documents serve as your legal defense in case of audits or clearance delays. Include them in your shipping file, and keep backups for at least 5 years. For a detailed documentation guide, refer to this government import compliance manual ⁶.

Here’s what we now require from every Vietnamese supplier:

Vietnam Supplier Compliance Table

The more proactive you are, the smoother your customs process will be—and the lower your exposure to delays or penalties.

Conclusion

You can avoid Section 301 tariffs by sourcing from Vietnam—but only if the transformation is real and well-documented. Otherwise, you're risking violations, fines, and massive delays.

Footnotes