Trade Still Needs More Guidance on Section 232 Tariffs for Derivatives, Transshipment: Attorney

One outstanding question is whether it's possible to back out the value of an item's non-steel content to determine the value of the steel content based on value left after the non-steel items are removed, according to a question posed in the webinar, which was sponsored by the Customs Brokers and Forwarders Association of Northern California.

"I don't think so, but again, we haven't seen very much from Customs about this. This is still very early in the process," Tuttle said. "But Customs has said that, both in the CSMS messages, as well as in their frequently asked questions, [that] you determine the value of the steel content based on the price paid or payable for it.

"So, I think what they're really saying there is that you have to go to those invoices from the supplier for the steel or aluminum content, and then you prorate that price based on the amount of steel or aluminum that you determine by weight ... or length or whatnot," he continued.

Another example is when the supplier purchases steel or aluminum in a different currency, as reflected by the invoice, and the broker must determine how to price the purchase in U.S. dollars.

Tuttle answered that the broker should go by the "old standby rule," which is to use the rate in effect at the date of exportation, although "that [question] is something that I probably want to check with Customs," he said.

Tuttle likened the complex situations to analyses that importers must conduct under USMCA on inventory management systems.

"How [do] you use the inventory management systems when you have the same product or product number [that] was purchased over a period of time? How do you determine what the value is for the product that was used to produce the units that were within the particular lot number?" Tuttle said. "[It's] very complicated. You don't just simply take an average of the price over the year. ... We don't know, because Customs hasn't offered any advice or guidance on that at this point in time. So there are certainly some challenges to how you present that information."

Tuttle cautioned brokers to avoid getting "into this level of the weeds without advice from Customs, because you could give [importers} wrong advice. You can, yeah, Customs will accept that. [But] if you don't have any experience with Customs and input from Customs on how you determine these values, you could be getting into problems with your customer if Customs comes back and audits this stuff."

Tuttle said he still receives a lot of questions from brokers and importers about the process for calculating what duties are owed on goods that fall under the Section 232 tariffs for steel and aluminum derivatives.

Importers need to identify the items with potential steel or aluminum content and request invoices from the supplier to the buyer that capture the weight, the value and the origin of the steel or aluminum, Tuttle said. They also must request that suppliers certify their data.

Meanwhile, brokers have to exercise that level of reasonable care and explain what the importer needs to do if they want to reduce their duties, Tuttle continued.

"The question is, how much of a value is it for you to go through this process and to figure that out? That's between you and your importer as a broker," Tuttle said. "But as a broker, you should be communicating how they have to go about doing it, or giving them options in how to do this. I know this is an area that's fraught with a lot of questions. A lot of questions come to me about, 'what are our options? How do we do this?'"

In addition to fielding questions about Section 232 tariffs and providing overviews on the various tariff regimes, Tuttle discussed how the government has yet to define what constitutes transshipment, as presidential proclamations appear to be alluding to a definition that's different from how transshipment has been traditionally defined (see 2508210060).

"Transshipment can have several different meanings. For example, does it mean that the goods went by boat from one country to a third country, and the third country was used as the country of origin because the reciprocal tariff is less? Or does it mean a product that underwent simple assembly in a third country?" Tuttle said. "Because, if it undergoes simple assembly, I don't have substantial transformation. If I don't have substantial transformation, then the country of origin is maybe the country [where] the components came from, right? Or is it the value of the components from a third country exceeding a certain value threshold of more than some uncertain amount? We simply don't know."

He continued, "There's been no guidance that's been issued on this transshipment issue, but what we need to do is encourage our brokers to do an origin analysis on their products. Do the suppliers know the product origin, or did they just purchase them? The fact that they were purchased in a country doesn't mean that they could have been transshipped. They could have gone from China to a third country, like Vietnam. Do we have a substantial transformation? We don't know, but this is really a significant issue. I don't think importers are paying enough attention to this and realizing the kind of trouble that they can get into without appropriately documenting the origin of these goods."