Made in USA (heating component Made in China) - this is not a substatial transformation, right?

[itolduandso]

Oven:

Made in the U.S.A.
Heating component (Powerhead):

Made in China

This is not a substatial transformation, right?

I am selling one like this...

https://i.ebayimg.com/images/g/bs8AAOSw28Fkw42h/s-l1600.webp

https://www.cafr.ebay.ca/itm/176210877080

Note the label on the box... says Made in USA. The attached screenshot shows the label. I guess I still have to make sure the box doesn't contain other separate Made in China parts like User Guide printed in China etc.

I read the write-up on Chitchats on the links they provide to US imports marking. Here is the part that talked about the transformation:

This doesn't look like it applies. So I guess I have to separate the value of the powerhead from the rest of the oven? Impossible to do, this is 1990 model. Nobody will tell me. The company doesn't exist anymore, it's part of Nesco today.

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2. Substantial Transformation

If a product undergoes a major transformation in a second country—changing so significantly that it becomes a new item with a different name, character, or use—then the COO may shift to that country.

Substantial Transformation Examples:  

• Sugar from Country A, flour from Country B, dairy products from Country C, and nuts from Country D are taken to Country E. In Country E, these products are further manufactured into cookies. (The separate ingredients were substantially transformed into a product of Country E, in that a new type of goods resulted from processing).  
• Fresh vegetables grown in various countries are taken to another country to be mixed together and frozen. (The vegetables were NOT substantially transformed into products of the country where mixing and freezing occurred, and the mixture must be labeled with the origin of each ingredient).  
• Repackaging, dilution with water, and similar minor processes usually do NOT cause a substantial transformation. Assembly or disassembly may result in a substantial transformation, depending on the nature of the products involved and the complexity of the operations. 

Example 1 with a free trade agreement

Tariff shift - A change in tariff classification under the Harmonized System: A product’s classification changes to HS Headings 2203 through 2209, from any other heading except from another heading within that group.

A change to subheadings 3402.11 through 3402.19 from any other subheading within heading 3402, provided there is a regional value content of not less than: (soap products) 

(1) 35 percent when the build-up method is used, or  

(2) 45 percent when the build-down method is used. 

Example 2 with a free trade agreement

The good is a new or different article of commerce that has been grown, produced or manufactured in the territory of an FTA country or of the United States, or both, and the sum of:  (A) the value of each material produced in the territory of FTA country or of the United States, or both, and  (B) the direct costs of processing operations performed in the FTA country or of the United States, or both, is not less than 35 percent of the appraised value of the good at the time the good is entered into the territory of the United States; 

Note: The term “new or different article of commerce” means, except as provided in this subdivision, a good that:  (1) has been substantially transformed from a good or material that is not wholly the growth, product or manufacture of Oman, the United States, or both; and  (2) has a new name, character or use distinct from the good or material from which it was transformed, but a good shall not be considered a new or different article of commerce by virtue of having merely undergone  (I) simple combining or packaging operations, or  (II) mere dilution with water or another substance that does not materially alter the characteristics of the good. 

3. Significant Increase in Value

A substantial increase in a product’s value may also impact its COO. If the retail value of the finished product is significantly higher than its original value due to manufacturing, processing, or assembly, this could indicate a change in COO. However, the exact percentage required for this determination varies.

We strongly recommend consulting CBP regulations, trade agreements, and tariff shift rules. When in doubt, contacting CBP directly will help clarify the appropriate COO designation for your shipments.

[brettjet38]

It says made in the USA, then its made in the USA for Customs requirements, tariffs also.

[dinomitesales]

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@brettjet38 wrote:

It says made in the USA, then its made in the USA for Customs requirements, tariffs also.

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The agents at the land-border crossings disagree. DYK reported that an entire truckload was refused because a package was opened and the contents said "Made in USA, Sleeves made in China" (a sealed trading card product).

Better to err on the safe side I would say and just avoid listing anything that says China on it if you want to use a cross-border shipper.

[sapphyres-designer-jewellery]

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@dinomitesales wrote:

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@brettjet38 wrote:

It says made in the USA, then its made in the USA for Customs requirements, tariffs also.

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The agents at the land-border crossings disagree. DYK reported that an entire truckload was refused because a package was opened and the contents said "Made in USA, Sleeves made in China" (a sealed trading card product).

Better to err on the safe side I would say and just avoid listing anything that says China on it if you want to use a cross-border shipper.

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Also as I read it, you can't separate the China part from the rest of the shipment. If one item is made in China, then the tariff applies to the whole shipment.

C.

[ilikehockeyjerseys]

If this is a one off item, don't list it for sale in USA. It's not worth the liability of sending it.

If this is an item you sell a large quantity of and base your business model on, consider spending the money to consult with a professional who will know the proper answer. 

[brettjet38]

So, it looks like they are serious about Chinese anything coming into the USA...

[itolduandso]

I have another item which is a specialized phone for the visually impaired people and it is Made in the USA. Everything is made in USA but the power supply is Made in China. I used acid to erase the Made in China on the charger itself. 

I was told when I called Canada Post today, they said I need to put a label on top of the box saying "This is a Set".

The word Set is apparently the key what needs to be mentioned, I was told. 

In this case the box says Made in USA and there is nothing on it saying Made in China.

There is no power supply on the market it would be made in USA for the last 30 years at minimum.

So are you supposed to strip all products of parts and look inside if it says Made in China?

[lotzofuniquegoodies]

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@itolduandso wrote:

I have another item which is a specialized phone for the visually impaired people and it is Made in the USA. Everything is made in USA but the power supply is Made in China. I used acid to erase the Made in China on the charger itself. 

I was told when I called Canada Post today, they said I need to put a label on top of the box saying "This is a Set".

The word Set is apparently the key what needs to be mentioned, I was told. 

In this case the box says Made in USA and there is nothing on it saying Made in China.

There is no power supply on the market it would be made in USA for the last 30 years at minimum.

So are you supposed to strip all products of parts and look inside if it says Made in China?

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On a whim (did this as routine working in warehousing for anything being exported) have purchased a small package of Made in Canada and made in USA stickers. They arrive. Made in China. Figure if I purchase made in China they will be printed in Canada. Okay...not likely. Just thought I would share.

Yes, you can print your own, but at least this way customs knows I am making an effort to meet their requirements having an "official" label.

That set information would be extremely important for anyone selling electronics where there are multiple components including a power supply. 9 x out of 10 are made in China and the balance of the item is made somewhere else.

Canadian rules regarding country of origin and mixed content.

https://www.cbsa-asfc.gc.ca/import/origin-origine-eng.html

Sidenote: Fortunately each label is not marked made in China or any Canadian made shipment would turn into a 99% Canada....1 % China shipment.  = Chinese shipment. 😅How is that for a really bad exchange rate?

[itolduandso]

Would you attach that sticker to every single piece that is loose inside the box? I have seen people at Stallion Express doing it. Taking stuff out one by one and placing a paper sticker on every lose item even if it's part of the whole solulution they are selling. I bet when buyers see paper stickers everywhere they will not be happy since the cheap stickers leave residue if they are removed or they are just torn apart when removing them. The removeable stickres cost money. 

[lotzofuniquegoodies]

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@itolduandso wrote:

Would you attach that sticker to every single piece that is loose inside the box? I have seen people at Stallion Express doing it. Taking stuff out one by one and placing a paper sticker on every lose item even if it's part of the whole solulution they are selling. I bet when buyers see paper stickers everywhere they will not be happy since the cheap stickers leave residue if they are removed or they are just torn apart when removing them. The removeable stickres cost money. 

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@itolduandso 

When we were sending Automotive parts to USA (NOS & Aftermarket) we just placed labels on outside of each box using (printer generated) country of origin stickers. All that was required at the time and had no issues.Skids could be mixed but boxes had to be individually sorted and marked.  If they are using more strigent guidelines...ie rules I'm not sure. We were a high volume shipper with parts from multiple countries. There "used" to be a % of content rule, easier to be known if you are a manufacturerer. Not so easy for re-sellers. Unsure why the strictness when using Chit Chats. Optimistically hoping as I have noted in other posts on the subject they are using judgement. They have to understand that resellers can't know all the rules ins and outs. Even they have to resort to checking or asking someone else to confirm. 

As a side if you were a manufacturer (which I have also worked for) there would be components for mutiple countries composing the item. On outside of unit we marked and declared as Made in Canada. Single sticker. A Coo Certificate was on file for each product we made with customs and was noted on our customs invoice and included with packing slip attached to each wb when shipping internationally.

[byto253]

Not sure how to handle small digital cameras that were made in Japan but I bought an aftermarket charger that is made in China of course.  

[itolduandso]

I bet that camera if it's consumer grade and made recently may have a charger that was made in China anyways. Only higher end products made in Japan still have power supplies made in Japan but others hardly do.

[itolduandso]

@ilikehockeyjerseys All are individual items. I don't sell multiples. 

Reading online it looks like the "Significant transormation rule" seems relatively clear. If I purchase a mechanical part like like a widget a or an electronic part like a transistor, it has a certain use, once it becomes the final product that was engineered and assembled, the widget and transistor have no meaning to the end-user. What matters is the final product function. That is signicant transformation. With the power supply, it was outsourced in a separate product, it's not transformed, in fact it is actually an essential component, without which the product can't be used. If the user guide was printed in China, you could argue whether it is essential or not but going from what some people say, even that may not withstand the argument. 

As the seller, I should have been capable of knowning the power supply is not made in USA, it should have been declared as made in China in the manifest.

How will the US border agent decide in this case, depends on how strict they interpret the regulations (how lucky to have package not inspected and scrutinized).

There is probably good chance it will pass through without any issues as long as the box says Made in USA and the sticker on the box says Country of Origin being USA. 

If they go by the book, they may consider it a Chinese made product entirely because of the adapter. If they go less strict, they may put tariff on that power supply. Since I didn't mention anything about it (and didn't mention estimated market value), they may put their value on it, whatever they feel it's worth.

If I declare it honestly and put value on it, I would need to put at least 15-20 dolalrs. This would still increase the total cost for the buyer by 50 dollars or more if they need to pay the tariff.

They may just let to go, but I don't want to take the chances. The item sold price is 200 dollars , the SRP cost 300 dollars. I don't want get into trouble. 

So I removed the Made in China on the power supply, this may just go through fine. 

The buyer can get the same original manufacturer power supply (also made in China, still US stock) new purchase on Ebay for a few dollars. 

I was digging a bit further to confirm if it would work fine and then I came across around something called intent and circumvention to ship an complete product to achieve a different tariff clacification. In other words, intentionally removing the supply to make the product appear it is now US made is something that was applied in the past for commercial importers, but in the theory it exists and it is important in case the product contains other US made components that are built-in even if they have gone through transformation. 

I even removed the 9V battery from the package (made in Malaysia), the battery is standrad battery the buyer can get in any store. I don't see anything else I could strip.  The user manual doesn't have anything printed on it, doesn't say Printed in USA or anywhere.... I am going to just let it go as part of the US Made phone.

I think most people don't spend the time to investigate the issue of power supply. Crazy, who has time for this!! But there is so little guidance and information how to deal with it and I didn't want to get this package held somewhere because of this. Stallion has no clue, Chitchats no clue, you call their overstressed customer support (which by the way I believe is outsourced now because they just they have text message to their supervisor to get response to questions and will get back to me).

Honestly, are they going through scrutinize every single package like this on the border if they are millions of packages every day?  I doubt. Putting the sticker Coutry of Origin would mostly resolve this and I think if I don't lie about the product being made in the USA (which I am not in the case of the phone itself), then most small shipments would be fine and pass the border, Otherwise they need 100's of thousands employees at the border. Given how Trump wants to cut down costs in the government, how can he afford to hide all the agents to handle the shipments? He can't. 

So I believe sending my shipment with the power supply made in China would be probably fine ... AS LONG as it is declared in the manifest.

As for as the Oven made in USA with the Power component made in China, I have decided to not ship this as US made product. This will be a big problem. I will stay out of trouble on this one. In fact, there is plenty of evidence where US authories have challenged the Made in USA statement on marketing materials and packaging in the past as to when it can be used at all. The powerhead being essential part of it and the most valueable when it comes to replacing it, the whole Made in USA claim could be easily challenged. This box being big, hard to miss, I don't think I will take the chances.

@lotzofuniquegoodies The percentage rule would apply in the old days but it looks like this administration has zero tollerance policy. 

[lotzofuniquegoodies]

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@itolduandso wrote:

@ilikehockeyjerseys All are individual items. I don't sell multiples. 

Reading online it looks like the "Significant transormation rule" seems relatively clear. If I purchase a mechanical part like like a widget a or an electronic part like a transistor, it has a certain use, once it becomes the final product that was engineered and assembled, the widget and transistor have no meaning to the end-user. What matters is the final product function. That is signicant transformation. With the power supply, it was outsourced in a separate product, it's not transformed, in fact it is actually an essential component, without which the product can't be used. If the user guide was printed in China, you could argue whether it is essential or not but going from what some people say, even that may not withstand the argument. 

As the seller, I should have been capable of knowning the power supply is not made in USA, it should have been declared as made in China in the manifest.

How will the US border agent decide in this case, depends on how strict they interpret the regulations (how lucky to have package not inspected and scrutinized).

There is probably good chance it will pass through without any issues as long as the box says Made in USA and the sticker on the box says Country of Origin being USA. 

If they go by the book, they may consider it a Chinese made product entirely because of the adapter. If they go less strict, they may put tariff on that power supply. Since I didn't mention anything about it (and didn't mention estimated market value), they may put their value on it, whatever they feel it's worth.

If I declare it honestly and put value on it, I would need to put at least 15-20 dolalrs. This would still increase the total cost for the buyer by 50 dollars or more if they need to pay the tariff.

They may just let to go, but I don't want to take the chances. The item sold price is 200 dollars , the SRP cost 300 dollars. I don't want get into trouble. 

So I removed the Made in China on the power supply, this may just go through fine. 

The buyer can get the same original manufacturer power supply (also made in China, still US stock) new purchase on Ebay for a few dollars. 

I was digging a bit further to confirm if it would work fine and then I came across around something called intent and circumvention to ship an complete product to achieve a different tariff clacification. In other words, intentionally removing the supply to make the product appear it is now US made is something that was applied in the past for commercial importers, but in the theory it exists and it is important in case the product contains other US made components that are built-in even if they have gone through transformation. 

I even removed the 9V battery from the package (made in Malaysia), the battery is standrad battery the buyer can get in any store. I don't see anything else I could strip.  The user manual doesn't have anything printed on it, doesn't say Printed in USA or anywhere.... I am going to just let it go as part of the US Made phone.

I think most people don't spend the time to investigate the issue of power supply. Crazy, who has time for this!! But there is so little guidance and information how to deal with it and I didn't want to get this package held somewhere because of this. Stallion has no clue, Chitchats no clue, you call their overstressed customer support (which by the way I believe is outsourced now because they just they have text message to their supervisor to get response to questions and will get back to me).

Honestly, are they going through scrutinize every single package like this on the border if they are millions of packages every day?  I doubt. Putting the sticker Coutry of Origin would mostly resolve this and I think if I don't lie about the product being made in the USA (which I am not in the case of the phone itself), then most small shipments would be fine and pass the border, Otherwise they need 100's of thousands employees at the border. Given how Trump wants to cut down costs in the government, how can he afford to hide all the agents to handle the shipments? He can't. 

So I believe sending my shipment with the power supply made in China would be probably fine ... AS LONG as it is declared in the manifest.

As for as the Oven made in USA with the Power component made in China, I have decided to not ship this as US made product. This will be a big problem. I will stay out of trouble on this one. In fact, there is plenty of evidence where US authories have challenged the Made in USA statement on marketing materials and packaging in the past as to when it can be used at all. The powerhead being essential part of it and the most valueable when it comes to replacing it, the whole Made in USA claim could be easily challenged. This box being big, hard to miss, I don't think I will take the chances.

@lotzofuniquegoodies The percentage rule would apply in the old days but it looks like this administration has zero tollerance policy. 

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@itolduandso 

Based on the points you have made in your above post that is very likely the reason they (the Donald) keeps changing & modifying his mind on the how a auto with all of its assorted parts from all over go back across the border multiple times.This is  where one could feel sorry for those customs officials trying to interpret his interpretation of how things should work vs how things actually work. 

[flipistics]

@itolduandso  You could always try phoning US customs and asking them.