Main Idea: Comprehensive understanding of tariff classification and country of origin determinations is necessary for importers to determine the full scope of duties that may be applicable to their merchandise.

In N328620 (Oct. 27, 2022), U.S. Customs and Border Protection (CBP) discussed the tariff classification and country of origin marking for a steel racking structure from China. The product at issue was a steel racking structure designed for housing and storing equipment in data centers. The racking structure’s steel components include: (1) frame uprights, (2) tube beams, (3) connecting vertical beams, (4) cantilevers, (5) vertical support beams, (6) T-shape outriggers, (7) base plates and junction plates, (8) horizontal braces, and (9) flanges, bolts, nuts, and screws. The steel structure houses electrical and fiber cables and the cold air duct system used for cooling and thermal management in data centers. All the components are shipped unassembled and together, requiring installation after importation into the United States.

CBP determined that the steel racking structure is classified under subheading 7308.90.9590, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Structures (excluding prefabricated buildings of heading 9406) and parts of structures, such as bridges and bridge sections, lock gates towers, lattice, masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns) of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, or iron or steel: Other: Other: Other: Other: Other.” The rate of duty is free.

CBP then analyzed the country of origin for the steel racking structure under the agency’s marking rules.  Part 134 of the Customs Regulations (19 CFR Part 134) outlines the country of origin marking requirements and exceptions, under 19 U.S.C. 1304.

Under CBP’s regulations, the country of origin for marking purposes for most imported products is the last country where they product underwent a “substantial transformation” prior to being imported into the United States. A “substantial transformation” is defined generally as working or processing which results in the creation of a new and different article of commerce, having a name, character or use different from those of its components. 19 C.F.R. Part 134.35(a).  CBP applies the “substantial transformation” test on a case-by-case basis as noted in Superior Wire v. United States, 867 F.2d 1409 (Fed. Cir. 1989).

In this instance, CBP determined that the components or the packaging of the structure should be marked upon importation in a legible, permanent, and clear manner with “Made in China”, pursuant to 19 U.S.C. 1304(a)(3)(D); 19 CFR 134.32(d).

Finally, CBP noted that products of China classified under subheading 7308.90.9590, HTSUS, such as the racking structure are subject to an additional 25 percent of ad valorem rate of duty under the “Section 301 additional duties”, unless specifically excluded and that the product may be subject to antidumping duties and countervailing duties (AD/CVD).

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Photo of Simeon Yerokun Simeon Yerokun

imeon Yerokun is a counsel in Crowell & Moring’s International Trade group and based in the firm’s Washington, D.C. office. He advises clients on all areas of import regulatory compliance, trade remedies, and international trade litigation.

Simeon has extensive experience counseling companies in

…

imeon Yerokun is a counsel in Crowell & Moring’s International Trade group and based in the firm’s Washington, D.C. office. He advises clients on all areas of import regulatory compliance, trade remedies, and international trade litigation.

Simeon has extensive experience counseling companies in the areas of business and human rights law, including compliance with global anti-forced labor and human rights requirements. He regularly represents companies before U.S. government agencies on forced labor-related matters, including securing the release of goods detained and seized by U.S. Customs and Border Protection. He also offers deep experience assisting companies in mapping their supply chains, including linking imported products back to their raw materials using enterprise software and other inventory management audit tools. Simeon is highly accomplished in forced labor supply chain mapping and risk assessments, as well as verifying due diligence efforts with on-the-ground visits to client facilities, incorporating third-party intelligence and audit resources.

Simeon’s experience also covers a broad spectrum of trade and customs issues, including those related to import regulatory compliance matters such as valuation, classification, duty drawback, marking and labeling, entry procedures, and penalties; free trade agreements; antidumping and countervailing duty issues; trade litigation; intellectual property issues such as trademark and copyright infringement; the enforcement of exclusion orders issued by the International Trade Commission (ITC); steel and aluminum tariffs under the Section 232 National Security Investigation; and the additional tariffs on products from China under Section 301 of the Trade Act of 1974.

Additionally, Simeon handles antidumping (AD) and countervailing duty (CVD) investigations before the U.S. Department of Commerce’s International Trade Administration (ITA) and the U.S. International Trade Commission (ITC) under the Tariff Act of 1930, and litigation involving the U.S. Court of International Trade (CIT).

Prior to joining Crowell, Simeon was a trade and finance attorney in the Office of Chief Counsel—U.S. Customs and Border Protection (CBP), and before that, he served as counsel to Commissioner Irving A. Williamson at the U.S. International Trade Commission.

Simeon is a proud graduate of Howard University School of Law, where he served as technical editor of the school’s Human Rights and Globalization Law Review.

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Photo of Emily Devereaux Emily Devereaux

Emily Devereaux is a senior international trade analyst I in Crowell & Moring’s Washington, D.C. office. She provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and

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Emily Devereaux is a senior international trade analyst I in Crowell & Moring’s Washington, D.C. office. She provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection (CBP). She works closely with attorneys developing courses of action for clients impacted by investigations under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. She also supports unfair trade investigations, including antidumping (AD) and countervailing duty (CVD) investigations, sunset reviews, and changed circumstance reviews before the Department of Commerce and the International Trade Commission (ITC).

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