Here’s what you need know to prepare your Section 232 shipments, declare them correctly, and avoid paying more duty than you have to.
What is Section 232?
Section 232 of the Trade Expansion Act of 1962, as amended, authorizes the President to take action to adjust the imports of an article and its derivatives if the President concurs with the Secretary’s finding that the article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.
What is Different with the Expanded Section 232?
What’s different with this expanded edition is that it includes derivatives. This means that not only raw steel and aluminum but also finished products that contain aluminium in whole or in part will be subject to the 25% tariff. (I will explain shortly how to distinguish this.)
This tariff is worldwide. Even the countries where the US maintains free trade status will be subject to the expanded Section 232 tariff.
Even the countries that were exempt from the section 232 back in 2018 will now be subject to the Section 232 tariff including but not limited to:
Argentina, Australia, Brazil, Canada, (meeting scheduled for later this week, details to follow) EU, UK, MX, Ukraine, South Korea.
Some importer specific exclusions will remain in effect the general exclusions previously in place are all terminated effective today March 12.
The section 232 tariff will not be eligible for duty draw back (this means if re-exported the duties will not be refundable).
The Section 232 also eliminates FTZ entries with the recent expanded edition. FTZ shipments will only enter as privileged foreign status which means that yes, the duties and tariffs will be deferred until withdrawal for consumption. But if the goods are modified in the FTZ in a form that would make it under other circumstances eligible for duty free treatment, it will now be ineligible. The full tariff will be applicable upon withdrawal for consumption.
How to Declare Derivatives Within a Specific Product
Until now, if your product was a tumbler, you had a HTS for tumbler (7323.93.0080) and you would declare the value for each tumbler and pay the appropriate duties and tariffs.
Now if you have a tumbler that is made of a mixture of silicon and metal or rubber, you will have to break down the value and weight for the metal part in a separate line item.
Let’s say each tumbler price is $10, $5 for the metal and $5 for the silicon, and the weight would be 3 KG for each tumbler, 2kg for the metal and 1kg for the silicon.
You would list the value for the silicon in line item 1 and leave the weight out, list the total quantity of the shipment, and then on line number 2 you would list the $5 for the steel and the total weight based on 2kg per each tumbler.
If the item is made in whole from steel or aluminum you would just list one line and have the appropriate tariff for the full value of the shipment.
Like I said earlier, this is not limited to just Chapter 73 of the Schedule B HTS code. It’s the full Chapter 73 for steel, and some of Chapter 84 and 94. For aluminum it will be most of Chapter 76 but will also be some of Chapters 66, 83, 84, 85, 87, 88, 90, 94, 95 and 96 (Chapters are the first 2 of the ten digit HTS code so to my example earlier the tumbler has a code of 7323.93.0080 which puts it under Chapter 73).
It is important to point out that customs will publish additional guidance on how to separate the value for steel and aluminum derivatives, but for now the above can be considered in compliance. However, because many will try to exploit and minimize the value of the steel and maximize the value of the alternative, it is important to have proper documentation and proof (whenever possible). That way, if and when customs question it, you can easily prove that you had a structured composition breakdown on what to base your value for each component. (Most manufacturers should be able to help you run these numbers easily.)
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