In today’s complex trade environment, ensuring tariff compliance when importing metals like steel and aluminum is more critical than ever. The recent changes to CBP Section 232 enforcement, coupled with other existing tariffs, mean that errors in HTS classification steel (and aluminum) or improper attempts at avoiding import penalties can lead to severe customs penalties steel imports and other metals. Understanding your obligations and exercising reasonable care customs is paramount.
The High Stakes of Non-Compliance:
U.S. Customs and Border Protection (CBP) has significant authority to penalize importers for errors in customs declarations. This is especially true if errors lead to underpayment of duties. Penalties can vary based on culpability :
- Negligence: Failing to exercise reasonable care can result in penalties up to two times the loss of revenue to the government.
- Gross Negligence: Willful disregard for facts or law can lead to penalties up to four times the loss of revenue.
- Fraud: Intentional violations can result in penalties up to the domestic value of the imported merchandise.
Beyond CBP penalties, the Department of Justice (DOJ) can use the False Claims Act (FCA) in customs fraud cases, potentially leading to treble damages plus additional fines. Criminal charges for customs fraud, false statements, or conspiracy are also possible for deliberate evasion. With heightened scrutiny on imports, especially those subject to multiple tariff layers, the tariff misclassification risk is a serious concern.
Key Areas for Tariff Compliance Focus:
- Accurate HTS Classification: The Harmonized Tariff Schedule (HTS) classification of your imported goods determines the applicable duty rates, including Section 232 tariffs. Incorrect HTS classification steel or aluminum products is a common source of violations. Ensure your classifications are precise and defensible.
- Correct Valuation: Declaring the correct value of your imported goods is essential. Undervaluation to reduce duty liability is a serious offense.
- Country of Origin Determination: Properly determining and declaring the country of origin is vital, especially with tariffs targeting specific countries or with provisions like the “melted and poured” exemption for certain Section 232 derivatives.
- Understanding Section 232 Nuances: CBP Section 232 rules have specific complexities. For example:
- Derivative Products: Some derivatives are dutiable on their full value, while others (those added in Feb 2025 and not in HTS Chapters 73 or 76) are dutiable only on their metal content. Misinterpreting this can lead to underpayment.
- No Duty Drawback: It’s critical to remember that duty drawback Section 232 is not available. Duties paid on Section 232 goods that are later exported cannot be recovered.
Practicing “Reasonable Care”:
CBP expects importers to exercise “reasonable care”. This means taking proactive steps:
- Maintain Thorough Documentation: Keep detailed records supporting your HTS classifications, valuations, and origin determinations.
- Conduct Internal Audits: Regularly review your customs practices.
- Seek Expert Advice: Consult with experienced trade counsel or customs brokers for complex issues.
- Stay Informed: Keep up-to-date with changes in trade laws and CBP guidance.
- Consider Voluntary Self-Disclosure: If you discover a violation, self-disclosing to CBP before they initiate an investigation can significantly reduce penalties.
Avoiding import penalties and ensuring tariff compliance isn’t just about following rules; it’s about protecting your business from significant financial and legal risks.
Worried about tariff compliance for your metal components? Redstone Manufacturing prioritizes transparent and compliant practices. Partner with us for your domestic manufacturing needs and reduce your exposure to complex import regulations. Contact us today!
Legal Disclaimer: The information provided in this blog post is for general informational purposes only and does not constitute legal or financial advice. Customs and tariff laws are complex and subject to change, and penalties for non-compliance can be severe. You should consult with a qualified professional, such as a customs broker or trade attorney, for advice tailored to your specific circumstances. Redstone Manufacturing assumes no liability for any actions taken based on the information presented here.