Tariff Questions – a Few Common Scenarios

We have been receiving questions from ASA members about the application of tariffs to various transaction models. Here are a few common scenarios upon which questions have been based. Note that we are using Airbus as our base manufacturer with an assumption that the parts and products in question are products of France (and thus subject to US import rules).

As always, tariffs are changing on a day-to-day basis so make sure you assess the current tariffs as of the date on which the the goods are entered into the United States.

Scenario 1 (“product of”):

An ASA member located in the United States purchase aircraft parts from a company in China. The aircraft parts were all manufactured in France, and are fully products of France. We assume for purposes of this scenario that the aircraft parts are not classified as articles of iron or steel, derivative articles of iron or steel, articles of aluminum, nor derivative articles of aluminum (see our earlier blog article on aluminum and steel). At some point in the past these aircraft parts were legally purchased by the company in China and imported into China (where they are currently located). The parts remain in the new, unused condition (with no material change from their original manufactured condition). The parts have never previously entered the United States. The parts are expected to be shipped from China to the ASA member’s U.S. location on or after April 18, 2025 (today’s date).

Discussion of Scenario 1 (“product of”):

The parts in this scenario are products of France. The fact that they have been warehoused in China does not change this. When imported into the United States, these parts will be identified under the appropriate HTSUS heading (e.g. 8807.xx) and subject to the general rate of duty associated with that heading (which may be a zero-duty heading). Because they are products of France, they will also be subject to the current temporary 10% tariff (HTSUS 9903.01.25) on imported goods “of any country.” There is currently no aviation exemption that would generally exclude this 10% tariff for aircraft parts.

The additional tariff on products of the EU is currently suspended. When (or if) the suspension terminates, products of the EU may revert to the 20% duty (HTSUS 9903.01.50).

Scenario 2 Complex Assembly

An aircraft parts was made in the United States (in the past). It was exported to France where it was installed as part of the assembly of a new Airbus aircraft. Does this make the aircraft a product of the United States or a product of France?

Discussion of Scenario 2 Complex Assembly

The manufacture of a complete aircraft is a complex assembly that represents a transformative process. The aircraft will become a product of France, even though its parts may have come from other locations. Each of the parts that make up the aircraft will become a product of France.

Note that the new temporary tariffs include a provision for substantial US value in a foreign product. If the U.S. content of a non-U.S. product provides at least 20 percent of the Customs value of the imported product, then the U.S. content value may be imported under HTSUS 9903.01.34 without being marked up by the temporary 10% tariff found in HTSUS 9903.01.25. The remaining non-U.S. content value remains subject to the temporary 10% tariff found in HTSUS 9903.01.25 unless some other exception applies. The term “U.S. content” refers to the value of an article attributable to the components wholly obtained, produced entirely, or substantially transformed in the United States.

Scenario 3 (Disassembly)

An ASA member purchases an Airbus aircraft that is entirely a product of France. The aircraft is currently located in the United Kingdom The ASA member causes the aircraft to be disassembled in the United Kingdom. The removed parts are then imported into the United States. What is the country of origin for these removed aircraft parts? What if there is an aircraft part that is removed and that particular part has a “made-in-the USA” dataplate on it?

Discussion of Scenario 3 (Disassembly)

While complex assembly is a transformative process, disassembly is not a transformative process. Consequently, the disassembly of the aircraft in the United Kingdom does not transform the removed parts into products of the United Kingdom. It also does not allow the parts to convert to products of any other nation. The assembly made the parts products of France and they remain products of France after they have been dissembled.

The unit that bears a “made-in-the USA” dataplate was transformed into a product of France when it was part of the complex assembly into an aircraft. Disassembly is not a transformative process so it does not restore a prior condition. The part remains a product of France (based on the earlier transformative process) even though it has a made-in-the-USA dataplate.

It is interesting to note that disassembly was considered to be production (a potentially transformative process) under NAFTA (see e.g. 19 C.F.R. 181.132), but not under the USMCA (see HQ 342177). The USMCA permits such goods to be treated as recovered material that can be formed into a remanufactured good under the right facts (e.g. 19 C.F.R. Part 182 Appendix A Section 4). Neither of these treaties is applicable to the problem as stated, however, because the disassembly in our scenario takes place outside of the U.S., Mexico or Canada.