CBP Watching for Misclassification, Valuation Issues for Section 232 Tariffs; Base Metals CEE 'Actively Involved'

Misclassification and valuation are among areas of enforcement focus for CBP's administration of the Section 232 tariffs on steel and aluminum, CBP officials said during an April 10 interview. "Classification is a way to play with it, valuation as well, but these are things we will have to look at," said John Leonard, executive director of trade policy and programs at CBP. There are some different considerations involved for looking at possible transshipments because most antidumping or countervailing duty evasions involve countries around China, such as Malaysia or Thailand, but those countries are affected by the 232 tariffs too, he said. "It's hard to put it in that same context," he said.

CBP has been actively engaged with all the recent trade remedy announcements on "what makes it easier, what makes it harder" for CBP to administer, said Brenda Smith, executive assistant commissioner in the CBP Office of Trade. "One of the things we're preparing for is misclassification," she said. CBP did "a lot of education" before the proclamation was finalized so others in the executive branch "understood what we might see and how we might head that off from the beginning," she said. "I think we are ready with our regulatory auditors, and our import specialists are on the alert, our National Commodity Specialists certainly are very engaged," but the breadth of tariff headings means "there's not a lot of places you can go to evade."

Implementation of new tariffs involves changes to both automation and the deployment of agency staff, Leonard said. CBP must update ACE and the quota system, "because we anticipate quotas will be in effect," with the new tariff codes, he said. The U.S. hasn't had true quantitative restrictions in about a decade, he said. The Base Metals Center of Excellence and Expertise has "been actively involved" because "they know what the industry looks like normally" and what potential evasion might look like, Smith said. "Having that industry expertise has been terrific."

CBP also worked closely with the International Trade Commission in looking at tariff codes, Smith said. "Some of these remedies we haven't done in years, so we're all sort of digging back deep" while "recognizing that the technology makes it a lot easier if we set it up right," she said. It's been about a decade since the last "absolute quota," as opposed to tariff rate quotas, Leonard said. "So there's some tweaking within our system that we have to do because that involves a potential change at cargo release. When you say 'a quota's been reached, now you can't bring any more freight in,' different systems are touched," Leonard said.

A decision is yet to be made on the quota deadline timing, Leonard said. CBP is actively providing input on "what we can do" and "what's administrable," Leonard said. Complexity generally makes it more difficult for CBP to administer. For example, "a quota at the 10-digit level" would make it complicated for CBP to implement, he said. CBP will likely use Post Summary Corrections for any Section 232 duty refunds due as a result of any product exclusions, Leonard said. When granted, such exclusions will be retroactive to the date an exclusion was posted for comment, the White House said on March 22 (see 1803230014).

CBP will likely use the same policy for immediate transportation (IT) entries that it did for the Section 232 tariffs for any future remedies, such as Section 301 tariffs, that don't specifically say otherwise, Leonard said. "That's our legal opinion on it and it shouldn't change per remedy," he said. CBP recently said that the steel and aluminum tariffs were only due on IT entries that were accepted by the port after the duty rates took effect (see 1804050027).