CBP Rules Mexico Country of Origin for Food Waste Disposers; Section 301 Duties Don't Apply

The country of origin of a Whirlpool food waste disposer is Mexico and Section 301 duties don't apply, CBP said in a customs ruling dated May 15. The agency found that, despite the motor in the garbage disposal being of Chinese origin, the manufacturing process in Mexico substantially transformed the original components into subassemblies, which were then combined to make the final food disposer.

The food waste disposers consist of component parts from the U.S., Mexico and China, with 34 "unique purchase parts" in total -- 14 from the U.S., 12 from Mexico and eight from China, CBP said. About 45% to 49% of the cost of the finished disposers is provided by Chinese-origin components, including the Chinese motor, while 29% to 31% of the cost is from Mexico-origin components, and 22% to 24% from U.S.-origin parts, the agency said.

Among the components, the shredder subassembly made in Mexico and the shredder ring made in the U.S. are the two main components that help the food disposer "shred food waste," CBP said. The assembly operation in Mexico consists of 10 steps, which include molding of plastic parts, pressing, fastening, screwdriving, and extensive testing with "complex tools and equipment," CBP said.

"In deciding whether the combining of parts or materials constitutes a substantial transformation, the determinative issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article," said CBP, citing a 2016 court decision involving Energizer Battery. "Factors which may be relevant in this evaluation may include the nature of the operation (including the number of components assembled), the number of different operations involved, and whether a significant period of time, skill, detail, and quality control are necessary for the assembly operation," CBP said.

Generally the motor imparts the essential character to "these types of assemblies," and "the country of origin of a motor will be determined by where the essential components of that motor, i.e. the stator and rotor, are made," CBP said. "However, whether an assembly process is sufficiently complex to rise to the level of substantial transformation is determined upon consideration of all of the operations that occur in a particular country, including any subassembly processes that take place in that country."

Here, CBP found that the Chinese-origin motor is transformed into a food waste disposer when it is combined with the other subassemblies created in Mexico. "The manufacturing process in Mexico will substantially transform the original components into various subassemblies, which will be combined together to form the final food disposer, a different article of commerce with a new name, character, and use," CBP said, holding that the country of origin for the garbage disposals was Mexico, and that 25% Section 301 China tariffs don't apply.

Whirlpool responded to our request for comment, saying that the "vast majority" of its food waste disposers are and will continue to be manufactured in Racine, Wisconsin, and the units referenced in the ruling are an "expansion" of the "product portfolio." Whirlpool added that "nothing is leaving our operations in Racine."