Maureen Thorson
Appearances
Planet Money
What "Made in China" actually means
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. Like, that's the step that would create a change in the name and use and character, right? Yes, right?
Planet Money
What "Made in China" actually means
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.
Planet Money
What "Made in China" actually means
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, customs might say that laptop is actually Vietnamese because the essence of the laptop is in the motherboard.
Planet Money
What "Made in China" actually means
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.
Planet Money
What "Made in China" actually means
Yes. And this 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? Yeah.
Planet Money
What "Made in China" actually means
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 Thorson to help us make sense of their logic.
Planet Money
What "Made in China" actually means
Yeah, I'm going to 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.
Planet Money
What "Made in China" actually means
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? We should be focused on the more complicated step of actually making the paper. Because the paper is the essence of a sticky note.
Planet Money
What "Made in China" actually means
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 transformation test. 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.
Planet Money
What "Made in China" actually means
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.
Planet Money
What "Made in China" actually means
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.
Planet Money
What "Made in China" actually means
Special thanks to Bill Reinsch, Robert Shapiro, and Damon Pike. I'm Alexi Horowitz-Ghazi.
Planet Money
What "Made in China" actually means
For Maureen's clients, those questions matter now more than ever. On April 2nd, 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.
Planet Money
What "Made in China" actually means
But figuring out something's country of origin is far from simple.
Planet Money
What "Made in China" actually means
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?
Planet Money
What "Made in China" actually means
And I'm Alexi Horowitz-Ghazi. 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.
Planet Money
What "Made in China" actually means
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.
Planet Money
What "Made in China" actually means
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.
Planet Money
What "Made in China" actually means
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. It's 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.
Planet Money
What "Made in China" actually means
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 flowerpots. She helps companies figure out that product's country of origin, get it labeled right, and declare it to customs.
Planet Money
What "Made in China" actually means
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.
Planet Money
What "Made in China" actually means
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?
Planet Money
What "Made in China" actually means
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. A new name, use, or character.
Planet Money
What "Made in China" actually means
Larry says the origin of the substantial transformation test was this Supreme Court case from 1908 involving corks. A U.S. company was importing corks from Spain, cleaning them up a bit, stamping on a logo, and the Supreme Court said...
Planet Money
What "Made in China" actually means
That is not a substantial transformation, because cleaning up the corks did not give them a new name, it didn't change how they were used, and it didn't really even change their character. They started out as corks, and they were still corks here in the U.S.
Planet Money
What "Made in China" actually means
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.
Planet Money
What "Made in China" actually means
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. Right.
Planet Money
What "Made in China" actually means
And asking those questions is kind of 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, trade lawyer by day.
Planet Money
What "Made in China" actually means
But by the 1980s, manufacturing was getting way more complicated. You could argue that any step in the process changed a product's name, character, or use. So where would Quartz draw the line? All of this came to a head in a fight over... Boat shoes. That's coming up after the break.
Planet Money
What "Made in China" actually means
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.