Guidance: Effective September 26, 35% Ad Valorem Duty on Chinese Tires for Passenger Cars, Light Trucks

(CBP)

On September 11, 2009, the President signed Presidential Proclamation number 8414, which imposes additional duties for three years on certain imports of Chinese rubber, pneumatic tires of a kind used on motor cars and on-the-highway light trucks, vans, and sport utility vehicles. ( 74 FR 47861 Published September 17, 2009)

These duties are imposed on Chinese tires under the “Chinese Safeguard” statute (commonly referred to by the statutory section “421” of the Trade Act) and are to be assessed on the tires described below that are entered or withdrawn from warehouse on or after September 26, 2009.

Specifically, the tires subject to this additional duty are Chinese origin new, pneumatic tires, of rubber, of a kind used on motor cars (except racing cars) and on-the-highway light trucks, vans, and sport utility vehicles and are, generally, to be mounted onto rims. These tires are classified in subheadings 4011.10.10, 4011.10.50, 4011.20.10, or 4011.20.50, of the Harmonized Tariff Schedule of the United States (HTSUS).

Not subject to this additional duty are:

• pneumatic racing car tires,

• new pneumatic tires of a kind used on large trucks and buses;

• new pneumatic tires of a kind used on agricultural or forestry vehicles and machines and construction or industrial handling vehicles or machines;

• new pneumatic tires of a kind used on aircraft, bicycles, motorcycles, trailers, all-terrain vehicles, and vehicles for turf, lawn and garden, and golf applications;

• pneumatic tires that are not new, including recycled and re-treaded tires; and

• non-pneumatic tires, such as solid rubber tires.

A new U.S. note, number 14, and two new subheadings are added to Subchapter III of chapter 99, Temporary Modifications Established Pursuant To Trade Legislation of the HTSUS, to collect the additional duty:

• 9903.40.05 applicable to 4011.10.10; 4011.20.10, and

• 9903.40.10 applicable to 4011.10.50 and 4011.20.50.

These subheadings have been programmed into ACS.

The new duties are in addition to those in column 1 general rate of duty and are imposed for a period of 3 years. For the first year, the additional duty shall be in the amount of 35 percent ad valorem above the column 1 general rate of duty. For the second year, the additional duty shall be in the amount of 30 percent ad valorem above the column 1 general rate of duty, and in the third year, the additional duty shall be in the amount of 25 percent ad valorem above the column 1 general rate of duty.

Thus, for Chinese origin new pneumatic tires, of rubber, of a kind used on motor cars (except racing cars) and on-the-highway light trucks, vans, and sport utility vehicles:

• Entered on or after September 26, 2009, through September 25, 2010, the additional duty is 35%;

• Entered on or after September 26, 2010, through September 25,2011, the additional duty is 30%;

• Entered on or after September 26,2011, through September 25, 2012, the additional duty is 25%.

The classification analysis to determine whether or not a good is classifiable in headings 9903.40.05 or 9903.40.10 is as follows:

• The good must be a new pneumatic tire of Chinese origin.

• The new pneumatic tire of Chinese origin must be of a kind used on motor cars (except racing cars), station wagons, sport utility vehicles (SUVs), vans, and on-the-highway light trucks.

Carborundum Factors:
The Court of International Trade has identified several factors which are indicative but not conclusive, to apply when determining whether merchandise falls within a particular class or kind. These factors include: general physical characteristics, the expectation of the ultimate purchaser, channels of trade, environment of sale (accompanying accessories, manner of advertisement and display), use in the same manner as merchandise which defines the class, economic practicality of so using the import, and recognition in the trade of this use. See United States v. Carborundum Co., 63 CCPA 98, C.A.D. 1172, 536 F. 2d 373 (1976), cert. denied, 429 U.S. 979. Application of the Carborundum factors, i.e., general physical characteristics, marketing information, expectations of the purchaser, and recognition of the trade as to the use of the product, to tires imported from China, will determine whether the tires are subject to the chapter 99 duties.

LT or P Designation:
Tires with an LT or P designation on the sidewall of the tire are within the chapter 99 designation. National Highway Transportation and Safety Administration regulations provide that a tire manufacturer may use an LT or a P symbol on the side wall of a tire to indicate that it is of the type that are to be mounted onto a light truck or passenger vehicle. See 49 CFR 571.139. These tires must meet certain physical requirements to be labeled with the LT or P labels. Thus, these tires are being specifically held out in the marketplace and are considered by industry to be tires of a kind to be mounted onto motor cars such as passenger vehicles, SUVs, vans, and light trucks. These tires also have the general physical characteristics of tires that are to be mounted onto the vehicles noted above and they are specifically being marketed as these types of tires.

Load Range:
In the absence of the LT or P designation, the load range of a tire is useful when determining if a tire is of the class or kind to be classifiable in the new Chapter 99 provision is the load range of the tire. The load range of a tire indicates the weight that each tire can carry. Thus, a tire that can only carry the weight of a motor car, light truck, or van has the physical characteristics of a tire that is to be mounted onto these types of vehicles. Tires that are of the kind to be mounted onto a motor car may have the following load indications: Standard Load (SL), Light Load (LL), or Extra Load (XL).

An on-the-highway tire that is of the kind to be mounted onto trucks will have an alphabetical load range indicator. Generally, a tire that has a load range of A through E (or some other equivalent standard) has the physical characteristics of a tire that is of the class or kind to be mounted onto a light truck. Tires with a load range indication of F will require additional information such as marketing information, channels of trade, etc., to determine whether or not it is of the class or kind to be mounted onto a light truck. A tire with a load range of G or higher is generally not of the class or kind to be mounted onto a light truck.

Questions regarding the implementation of this additional duty should be directed here.