CBP Says Section 301 Tariffs Apply in Modified Ruling on Electric Motors Assembled in Mexico

Finished motors assembled in Mexico from three components from China are classifiable in subheading 8501.10.4060 and subject to the 25 percent tariffs under Section 301, CBP said in a Sept. 13 ruling modification. CBP reached the same conclusion as in the ruling being modified, NY N299096, but said that ruling was "incorrect as to the application of the NAFTA Marking Rules and the country of origin of the product." The original ruling request came from Johnson Electric in July, CBP said.

The motors at issue include three components -- the rear housing, the rotor and the end cap assembly -- that are classified in heading 8503 of the Harmonized Tariff Schedule of the U.S., CBP said. Those components are imported into Mexico and assembled into the finished product, the agency said. While the original request "was for a country of origin determination," subsequent information from Johnson Electric "revealed that the inquiry was for purposes of determining the country of origin for purposes of application of subheading 9903.88.01," which includes the 25 percent tariffs in addition to the "general duty rate," CBP said.

The original ruling relied on the wrong NAFTA marking rule, CBP said. "The foreign components of the electric motor are classified under heading 8503, HTSUS, and meet the tariff shift requirement," the agency said. "Therefore, the country of origin, for purposes of marking, of the electric motor is Mexico." For classification purposes, "when considering a product that may be subject to antidumping, countervailing, or other safeguard measures, the substantial transformation analysis is applied to determine the country of origin," CBP said.

Here, "the foreign subassemblies are imported into Mexico where they will be assembled into the electric motor," CBP said. "The foreign subassemblies had a pre-determined end-use and did not undergo a change in use due to the assembly process in Mexico. Based on the information provided, the production process performed in Mexico is mere simple assembly and the foreign subassemblies are not substantially transformed. As the assembly of the Chinese parts into a motor in Mexico does not result in a substantial transformation of the Chinese parts, the motor remains a product of China."

Goods from China classified in subheading 8501.10.40 as “[e]lectric motors and generators (excluding generating sets): Motors of an output not exceeding 37.5 W: Of under 18.65 W: Other” are subject to the Section 301 tariffs. "At the time of importation, you must report the Chapter 99 subheading, i.e., 9903.88.01, in addition to subheading 8501.10.40, HTSUS, listed above," CBP said.