Starter Motor Component an 'Intermediate Good' That Doesn't Affect NAFTA Regional Value Content, CBP Says

Lawn tractor starter motors imported from Mexico with certain non-originating components are nonetheless eligible for NAFTA duty preferences because the non-originating components are incorporated into an originating “intermediate good,” CBP said in a recent ruling. The non-originating components undergo an allowed tariff shift before incorporation into the finished starter motor, so they don’t have to be taken into account when calculating the finished good’s regional value content, CBP said in ruling HQ H273100 (here), issued Jan. 6.

The starter motors, made in Mexico and imported by Johnson Electric under tariff subheading 8511.40.00, include a 1400-series DC brushed motor classifiable in subheading 8501.32.20 that is made from some non-originating materials. Some of the finished starter motor’s other components -- a clutch assembly, pinion components, and several other materials classifiable in subheading 8511.90 -- are ineligible for any tariff shift rules for subheading 8511.40, so the finished motor may only qualify under regional value content.

Johnson Electric said the non-originating materials in the 1400-series motor shouldn’t be included in the finished good’s regional value content calculation because the 1400-series DC brushed motor is an originating intermediate good. CBP agreed, finding the non-originating materials undergo a tariff shift allowed for subheading 8501.32. As such, the 1400-series motor is considered a wholly originating “intermediate good,” and its non-originating components don’t affect the regional value content of the finished starter motor. With a regional value content of not less than 50 percent under the net cost method, the finished starter motor qualifies for NAFTA preferences, CBP said.