Chinese-Origin Electronics, Repaired in Mexico, Still Subject to Tariffs, CBP Says

Electronic goods with Chinese components such as notebooks, laptops and modems reimported to the U.S after undergoing repairs in Mexico are still subject to Section 301 tariffs on the repairs, even though the repairs are duty free under USMCA, CBP said in a February ruling.

The goods were imported under Harmonized Tariff Schedule subheading 9802.00.50, which provides a complete duty exemption for articles returned to the U.S. after having been advanced in value or improved in condition by repairs or alterations in Canada or Mexico. However, "if the item remains a product of China, the additional 301 duties apply to the value of repairs, alterations, or processing performed abroad," a CBP spokesperson said.

The ruling was in response to a request for a binding ruling by C&J Logistical Services regarding the applicability of Section 301 measures for electronics returned to the U.S. from Mexico. C&J's U.S. facility ships used electronics, some of which are of Chinese origin, to another of its facilities in Mexico, where they are inspected, tested, and cleaned and repaired as necessary before returning to the U.S., C&J said in its ruling request. The electronics will not undergo a substantial transformation, C&J said.

Subheading 9202.00.50 does not apply to the non-repaired electronics, but CBP HQ suggested reimporting them under an alternate duty-free subheading, 9801.00.10, as U.S. goods returned after having been exported without having been advanced in value or improved in condition.