Classification Change Renders Steel Items Subject to Section 232 Tariff
© , Sandler, Travis & Rosenberg, P.A. Originally published in the [07/05/2019] issue of the Sandler, Travis & Rosenberg Trade Report. Reprinted by permission.
A recent U.S. Customs and Border Protection classification decision could embolden domestic companies to seek similar reviews in an effort to impose higher tariffs on goods from foreign competitors.
In ruling NY N293371, CBP applied General Rule of Interpretation 2(a) to classify steel special profiles from Germany that are imported for use in manufacturing forklift masts or carriages as blanks for parts of forklifts under HTSUS 8431.20.00. These profiles, which are incomplete steel mast rails and finger bars, are either (1) cut to a fixed length in accordance with customer instructions or (2) in lengths designed to fit within the transporting cargo container. They are not ready for direct use in forklifts but do have the approximate final shapes of the finished articles.
However, using GRIs 1 and 6, CBP has now revoked that ruling to reclassify the subject goods as angles, shapes, and sections of iron or non-alloy steel under HTSUS 7216.50.00. CBP explains that while these items may ultimately be destined for incorporation into a forklift they are not identifiable as such based on their condition as imported. Specifically, the beams are not welded to the plates and bars necessary to create the shape and dimensions of an inner, intermediate, or outer weldment of a mast, and the finger bars are not welded to the frame for attachment between the carriage and mast. Instead, it is the various cuts, notches, drilled holes, and welding that take place after importation that give the items the characteristics that dedicate them for use in a forklift or the weldment of the lifting mast or carriage.
This change means that the subject goods will now be subject to the Section 232 additional 25 percent duty on steel products. While both HTSUS subheadings at issue are duty-free, steel products of Germany under HTSUS 7216.50.00 are currently subject to the Section 232 tariff while products of that country classified under HTSUS 8431.20.00 are not.