Expect CBP Focus on Misclassification, Valuation Enforcement for Section 232 Tariffs, Customs Lawyer Says

CBP is likely to quickly focus on misclassification and valuation as enforcement issues involving the coming tariffs on steel and aluminum as a result of the politics and revenue involved, said Michael Roll, a lawyer at Pisani & Roll. Roll discussed the new tariffs during a webinar hosted by the Los Angeles Customs Brokers & Freight Forwarders Association of America. "That doesn't mean that they are going to jump out the gate on March 24 hitting people with penalties necessarily," but there will be a focus on "enforcement, enforcement and more enforcement," Roll said.

CBP will likely increase use of Customs Form 28s soon after the tariffs take effect once the agency can see "who's paying, who's not paying, and also who's paying how much," Roll said. Early on, CBP will be "on the hunt" for misclassifications, undervaluing and transshipping through Canada and Mexico, he said. For aluminum and steel imports from NAFTA countries, one open question is whether CBP can seek origin information through a CF 28 or if a NAFTA origin verification is required, he said. That may depend on whether the importer claims NAFTA on the entry, he said. "The president is giving CBP quite a bit of authority to administer" the proclamation, he said.

The new tariffs will apply to goods entered or withdrawn from a warehouse for consumption, Roll said. The tariffs are "in addition to" any duties that would be owed otherwise and aren't "cumulative," so the Section 232 tariffs are calculated on the base dollar amount without consideration of any other tariffs, he said. Brokers may need to work closely with importer clients that don't actually import raw steel or aluminum to see whether there's any exposure because it's not always clear, Roll said. For example, parts of photocopiers and piston engines were found by CBP to be classified within the tariff provisions at issue, he said.

Shipments arriving in the near future could also be affected if the entry is filed after the tariffs go into place, Roll said. For example, for a shipment that arrived before the effective date but stopped for examination, "the new duties would apply" if that entry is filed after the effective date, he said. It may be different for Immediate Transportation movements, he said. Unlike the inspection scenario, "the IT arrival date is what would control," he said. Goods brought in as Temporary Importation under Bond are also unlikely to be subject to the duties because TIB is a different entry type, Roll said.