CBP Provides Additional Information on Section 232 Duties for FTZs, Chapter 98 and TIBs

CBP on July 6 published additional guidance on the application of Section 232 tariffs to steel and aluminum products. A CSMS message issued by the agency includes an overview of requirements for foreign-trade zone admissions for products covered by the tariffs, as well as information on the application of Chapter 98 provisions, temporary importations under bond, and NAFTA originating goods and duty deferral restrictions.

Unlike products subject to Section 301 duties, which are entirely exempt if properly declared under a Chapter 98 tariff schedule subheading (see 1807050033), Section 232 tariffs are treated like normal duties for the purposes of the special classification provisions, CBP said in the message. “This means that goods eligible for Chapter 98 provisions that provide duty-free treatment are free of Section 232 duties. By contrast, where the Chapter 98 provision provides for the assessment of duties on a portion of the article, such as the value of the repair or other processing, Section 232 duties are to be assessed on that value,” CBP said.

The exception is goods imported under subheading 9802.00.60 of the tariff schedule, which covers articles of metals manufactured in the U.S. and exported for processing then returned to the U.S. for further processing. Goods imported under that subheading are subject to Section 232 duties, which “are to be assessed on the entire value of the articles,” CBP said.

Goods otherwise subject to Section 232 tariffs may enter the U.S. under a temporary importation bond, but the bond amount must account for the additional Section 232 duties, CBP said. Goods subject to new quotas imposed on South Korea, Argentina and Brazil as part of their agreements to avoid Section 232 tariffs may also enter the U.S. under a TIB, but they will count against quota amounts, the agency said.

The application of Section 232 tariffs on originating goods that are products of the U.S. and undergo processing in Canada or Mexico depends on whether that processing effects a substantial transformation. If the Canadian or Mexican processing does, then the good is a product of Canada or Mexico covered by Section 232 duties. If no substantial transformation occurs, the good remains a product of the U.S. and is not subject to the tariffs, CBP said. Goods subject to NAFTA duty deferral restrictions require a NAFTA consumption entry upon exportation to Mexico or Canada, and Section 232 duties will apply when a consumption entry is required, it said.

The CSMS message also restates the latest instructions for implementation of the tariffs by FTZs. Goods admitted to FTZs on or after March 23 may only be admitted as privileged foreign status, unless they are eligible for admission under domestic status, CBP said. Section 232 duties and quotas will apply upon entry. Section 232 duties and quotas also apply to goods admitted before March 23 under privileged foreign status. However, those rules don’t apply to imports that have been granted a product exclusion from Section 232 duties and quotas, which remain under normal FTZ procedures.