US reciprocal tariffs on Vietnamese goods were the hottest topic of 2025, with a 20% surcharge and a 40% rate for transshipped goods — but the legal picture changed fundamentally in February 2026 when the US Supreme Court ruled that IEEPA was not a basis for those tariffs. This article presents the full timeline so a Chinese-invested enterprise in Vietnam understands correctly: which tariff levels have ended, which origin enforcement mechanisms remain fully in force, and why an origin evidence file is still priority number one after the ruling.
Legal Basis
- US Presidential Executive Order 14326 of 31 July 2025 (based on IEEPA): from 7 August 2025, goods of Vietnamese origin imported into the US bore a 20% additional tariff; goods determined to be transshipped to evade origin bore a 40% additional rate — the reciprocal tariff framework applying in the period from August 2025 to February 2026.
- The US Supreme Court judgment of 20 February 2026 in Learning Resources, Inc. v. Trump: the IEEPA statute does not authorise the President to impose tariffs — the legal basis of the entire IEEPA reciprocal surcharge programme was rejected; Executive Order 14389 then terminated application of the IEEPA-based additional rates, including the 20% on Vietnamese goods and the 40% transshipment rate.
- Origin enforcement mechanisms not located in IEEPA and continuing independently in force: tariff evasion investigation under the EAPA statute (19 USC §1517), penalties for false origin declarations under 19 USC §1592, and the substantial transformation origin principle of US Customs (CBP) applied where goods of a third country are suspected of disguising as Vietnamese origin.
- Other tariff layers untouched by the IEEPA judgment: anti-dumping and countervailing duties under orders applying to specific products; tariffs under Section 232 of the Trade Expansion Act 1962 and Section 301 of the Trade Act 1974 for product groups within those programmes scope — an enterprise must check by specific goods code rather than assuming all surcharges have disappeared.
- On the Vietnam side: goods origin law (Decree 31/2018/ND-CP and certificate of origin C/O issuance rules) is the basis for an enterprise to prove the Vietnamese origin of goods when checked by CBP or a US partner — the origin file must prove a substantive production process in Vietnam, not merely an origin declaration.
Analysis in Practice
The question “in which cases are Vietnamese goods subject to reciprocal tariffs and the transshipment clause” must be answered by timeline, because the answer changes completely between two milestones. In the period from 7 August 2025 to February 2026, under Executive Order 14326, all goods of Vietnamese origin entering the US bore a 20% reciprocal surcharge on the normal rate; separately, goods CBP determined to be third-country goods (mainly Chinese goods) transshipped through Vietnam to evade origin — goods with no substantive origin transformation in Vietnam but declared as Vietnamese goods — bore a 40% surcharge and could face further handling under false declaration law. From after the US Supreme Court judgment of 20 February 2026 and Executive Order 14389 terminating the IEEPA rates, these 20% and 40% surcharges are no longer applied: an enterprise reading old analyses asserting “Vietnamese goods are bearing 20%, transshipped goods 40%” is reading information of an ended period.
What does not change after the judgment — and the point a Chinese-invested enterprise most easily becomes complacent about — is that the entire US origin enforcement machinery operates independently of IEEPA. If goods are substantively Chinese goods passing only simple processing in Vietnam, origin under US customs law remains China under the substantial transformation doctrine; the consequence is the goods bear Chinese-goods tariff rates (including Section 301 rates on Chinese goods where the product is listed), face EAPA evasion investigation if evasion through Vietnam is alleged, and fines under 19 USC §1592 if origin was falsely declared. The IEEPA judgment removed a surcharge layer applied on all Vietnamese goods; it does not legalise any origin disguise model, and CBP checking motivation for Vietnam goods with a Chinese element remains intact because the tariff layers on Chinese goods (Section 301, anti-dumping) are still there to be evaded.
The origin evidence file a Chinese-invested enterprise in Vietnam needs comprises three evidence layers attached to the real production process. Layer one is input evidence: contracts, invoices, import declarations for materials and components; material origin certificates and the proportion of each material source in the product. Layer two is production evidence: factory and line records, material consumption norms for each product, production logs, payroll and insurance of direct labour, factory utility bills — evidence proving the step creating substantial transformation occurred in Vietnam. Layer three is output and consistency evidence: warehouse ledgers, export documents, the C/O issued by Vietnam, and consistency among the four data links (purchases, production, inventory, sales). When CBP questions origin through the US importer, this file is demanded within a short deadline; an enterprise building it after being asked can hardly create credible past production data.
On the domestic value ratio: an enterprise should know that US customs law has no single value-added percentage threshold applied to every product to conclude origin — the central standard is substantial transformation, assessed on the whole of the process. Percentage thresholds exist in different systems: preferential origin rules of each trade agreement (usually using regional value content, commonly around 40% depending on the agreement and product) applied when claiming agreement tariff preferences; and Vietnam rules on “Made in Vietnam” labelling have their own domestic value content criteria for labelling purposes. The most harmful confusion is taking a percentage threshold of one system and applying it to another — especially believing that reaching 30% or 40% Vietnamese value automatically passes a CBP origin check: for CBP, a product with high Vietnamese value whose character-deciding step occurred in China may still be concluded to be of Chinese origin, and vice versa. The traceability system must be built from the day the factory starts production — not when inspection news arrives — because the entire value of the file lies in its continuity and consistency over time.
Recommended Actions
- Update the tariff position by the 20 February 2026 milestone: the IEEPA 20%/40% surcharges ended under EO 14389 — do not use 2025-period reciprocal tariff analyses for current decisions.
- Check tariffs by goods code for the layers still in force: Section 232, Section 301, anti-dumping and countervailing — these are now the current tariff risks of goods with a Chinese element.
- Maintain the 3-layer origin file (inputs, production, consistent outputs) as before the judgment: origin enforcement via EAPA and §1592 is unchanged.
- Do not use a trade agreement or labelling value percentage as the standard for passing a CBP check: the applied standard is substantial transformation on the whole process.
Frequently Asked Questions
In which cases are Vietnamese goods exported to the US subject to reciprocal tariffs and the transshipment clause?
In the period from 7 August 2025 to February 2026, under Executive Order 14326 (based on IEEPA): goods of Vietnamese origin entering the US bore a 20% reciprocal surcharge; goods CBP determined to be third-country goods transshipped through Vietnam to evade origin (with no substantial transformation in Vietnam) bore 40%. From after the US Supreme Court judgment of 20 February 2026 (IEEPA does not authorise tariffs) and Executive Order 14389, these IEEPA surcharges have ended. What remains fully in force is origin enforcement: goods substantively Chinese disguised as Vietnamese are still determined to be of Chinese origin, investigated under EAPA and fined for false declaration under 19 USC §1592, together with Section 232, 301 and anti-dumping layers applying by product.
With what file does a Chinese-invested enterprise prove Vietnamese origin for goods exported to the US?
With a three-layer file proving a substantive production process in Vietnam: the input layer — contracts, invoices, import declarations for materials and components, material origin certificates and the source structure of materials in the product; the production layer — factory and line records, material consumption norms, production logs, payroll and insurance of direct labour, factory utility bills; the output layer — warehouse ledgers, export documents and the Vietnam C/O, with the requirement that data across purchases, production, inventory and sales reconcile. This is the file CBP demands through the US importer when questioning origin and also the defence file in an EAPA investigation.
What domestic value-added ratio makes goods count as of Vietnamese origin when checked?
There is no single percentage threshold for a US Customs origin check: the applied standard is substantial transformation — goods with a new name, character and use after the production process in Vietnam — assessed on the whole of the process, not on a fixed value ratio. Percentage thresholds exist in other systems: regional value content in the origin rules of each trade agreement when claiming tariff preferences (the specific level varies by agreement, commonly around 40%), and domestic content criteria in Vietnam goods labelling rules. Using those systems thresholds as the standard for passing a CBP check is a dangerous confusion.
When should an enterprise build its material origin traceability process to be ready for inspection?
From when the factory starts production, not when inspection information is received. The value of a traceability file lies in the continuity and time-consistency of its data (material purchases, consumption into production, inventory and sales reconciling period by period), which cannot be built backwards after CBP or a Vietnamese authority has asked the question — fabricated past production data will contradict utility bills, payrolls and customs declarations that already exist independently. A Chinese-invested enterprise exporting to the US should operate the traceability system as part of its daily accounting and production system, with material consumption norms for each product code approved and archived.
This article has been quality-reviewed by the FLAW AI Legal Council