CBP Says High Tech Goods From China Eligible for USMCA Treatment if Imported From Mexico

Some “high tech” goods of Chinese origin sent to Mexico for minimal handling and then to the U.S. are eligible for USMCA tariff treatment, CBP said in an Aug. 7 ruling. Jose Fierro, an El Paso, Texas, customs broker, requested the ruling less than a week after USMCA entered into force July 1. The broker said that a client “has contracted with a Mexican maquiladora facility to provide certain logistical services” and inquired whether USMCA treatment would apply.

The merchandise includes “automatic data processing machines, digital processing units, input/output units, and storage units, is of Chinese origin and will be imported to Mexico directly from China,” CBP said. Workers at the maquiladora facility “will provide sorting, picking, packing, and shipping services in preparation” for shipping, and the goods will be exported to the U.S. “in the same condition as they were imported into Mexico,” Fierro told CBP.

The goods at issue are classified in headings 8471, 8473, 8504 and 8517, Fierro said. All those subheadings are included within General Note 11(p), which allows for such goods to be “deemed to be originating goods when imported into the customs territory of the United States from another USMCA country,” CBP said. As a result, “the Chinese-origin components will be deemed USMCA originating pursuant to GN 11(p) and, provided that all other requirements are met, will be eligible for USMCA preferential tariff treatment when imported into the United States from Mexico,” the agency said.

The USMCA provision seems to mirror what was allowed under NAFTA, Barnes Richardson lawyer Larry Friedman emailed. “The parties agreed to treat the enumerated items as originating once they are entered into the region,” he said. “This is effectively a customs union for IT products. Goods can move freely between the countries in a manner that is similar to the way the EU treats products imported from outside the customs union.”

CBP doesn't address in the ruling whether Section 301 tariffs would apply to the goods, but that may be because Fierro didn't specifically ask that question, Friedman said. The Section 301 tariffs seem likely to still apply here because the processing in Mexico doesn't result in a substantial transformation, he said. China is likely the country of origin under the marking requirements, “so, we end up with the entirely counterintuitive result of a USMCA-originating product that is marked 'Made in China' and subject to duties reserved" for goods from China, Friedman said.