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Assembly Operations (U.S. HTS 9802.00.80)

Many U.S. imports from Mexico and Canada are entered under U.S. tariff item 9802.00.80, which provides for a reduction in duties for articles assembled abroad in whole or in part of U.S. components. The duty on such articles is assessed on the full value of the article, less the cost or value of the U.S. components.

The rate applied to the dutiable value is that which would apply to the article as imported if it were not classified under HTS 9802.00.80. Hence, the duty reduction does not result from using a different rate of duty but rather by deducting the cost or value of the U.S. components from the total value of the article. Under the NAFTA, HTS 9802.00.80 may be used in conjunction with the preferential rate of duty that would apply to the article if it were classified in Chapters 1-97 of the tariff, provided the article originates and complies with all other requirements relating to the NAFTA. (For information on how the NAFTA will affect textile products under the Special Regime, see Chapter 5 of this publication.)

Races (HTS 8482.99.10) made in the United States are exported to Mexico for incorporation into ball bearings (HTS 8482.10.50). The remaining components are all made in Mexico. The imported ball bearing is considered originating because it is produced entirely in Canada, Mexico and/or the United States exclusively from originating materials (see Article 401(d)) and, accordingly, it is entitled to the NAFTA preferential rate of duty--9.9 percent during the first year of the Agreement. Assuming the total value of each ball bearing is US$10.40 and the value of the U.S. races in each bearing is US$2.40, the dutiable value is US$8.00 (US$10.40 - US$2.40). The duty calculation is:

9802.00.80 $ 2.40

8482.10.50 $ 8.00 x 9.9% = 0.80

The duty liability using only the preferential NAFTA rate would be US$1.03 per bearing. By using HTS 9802.00.80 in conjunction with the preferential rate of duty, additional savings of US$0.23 per ball bearing are made.

 

Last modified: 
May 14, 2014
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