CBP Revises Policy on Chapter 98 and Section 232 Goods

CBP updated its guidance on the Section 232 tariffs and Chapter 98 revisions in an April 14 CSMS message. The agency issued guidance in 2018 (see 1807060027) that said “Section 232 duties are assessed in the same manner as regular customs duties,” and that “goods eligible for Chapter 98 provisions that provide duty-free treatment are free of Section 232 duties.” That language was removed and replaced with language to say that while for valid claims “Chapter 98 treatment will be applied,” additionally, “Section 232 duties, under Chapter 99, will be assessed independently from any Chapter 98 treatment and in accordance with the applicable chapter 99 note.” CBP didn't immediately comment when asked for more information about the change.

The removal of the language on duty-free Chapter 98 provisions also being free of Section 232 tariffs is an apparent clarification by CBP of the prior guidance, Barnes Richardson lawyer Larry Friedman said. “The new guidance is that 232 duties apply independent of the Chapter 98 claim either to the full value of the merchandise or to the portion subject to regular duties. Without data on the value of Chapter 98 claims that have escaped 232 duties to date, the motivation for this change is unclear,” he said.

“Because it is a 'clarification' rather than a change, it appears CBP is implying this was the original intention,” Friedman said. “Chapter 98 provisions relating to US goods exported and returned or previously imported goods that were exported and returned in one form or another may not be terribly important to the relatively basic materials covered by the steel and aluminum duties. On the other hand, this change may have a bigger impact on the derivative products, which are more heavily processed or finished goods like wire and nails.”