CUSTOMS VALUATION & STEEL IMPORTS
GETTING VALUE FOR DUTY RIGHT IN THE STEEL INDUSTRY
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The US-Canada trade dispute created a trade environment that makes proper customs valuation a critical issue for businesses in the steel industry. In particular, getting the value for duty correct (and avoiding costly assessments by the CBSA and US CBP) is critically important when one considers that ordinary customs duties, surtaxes, special tariffs, and anti-dumping duties could potentially apply depending on the steel imports in question.
In this Steel & Aluminum Industry Report, we review the basics of customs valuation for steel importers.
Transaction Value of Steel Goods
Under s. 47(1) of the Customs Act, the ordinary method of appraising the value for duty of steel goods is Transaction Value. There are certain conditions that must be met in order to appraise goods under Transaction Value, and where not met, a subsidiary basis of appraisal must be used. The US also has similar rules with respect to Transaction Value under 19 USC § 1401a(a).
As a starting point, Transaction Value begins with the “price paid or payable” in respect of goods (“price actually paid or payable” in the US), which generally means the aggregate of all payments made by the purchaser – either directly or indirectly – to or for the benefit of the vendor for the steel goods.
Under Transaction Value, there are also certain amounts (fees or other payments, etc.) that must be included in the price paid or payable for steel goods (e.g., engineering and design work undertaken outside Canada and necessary for the production of the steel goods). Moreover, there are also certain amounts that can be deducted from the price paid or payable (chief among them, certain duties and taxes levied on the steel goods). While the required inclusions and permitted deductions under US law are similar, there are some slight differences.
Getting these additions and deductions to the price paid or payable right can be the difference between business as usual and a costly headache resulting from an assessment by the CBSA or US CBP.
Related-Party Rules & Transaction Value
Where steel import transactions involve related parties, special rules come into play if the importer attempts to use the Transaction Value. In particular, the importer of record will have to demonstrate that its import transaction meets one of the two tests set out in s. 48(1)(d) of the Customs Act (19 USC 1401a(b)(2)(B)):
- Circumstances Surrounding the Sale; or
- Test Values.
Under either test, the CBSA will be looking for evidence that demonstrates the relationship between the parties did not influence the price paid or payable for the steel goods.
US Tariffs & Transaction Value Reporting
Given the current tariff environment in the US, with significant section 232 tariffs imposed on steel goods through an April 2026 Presidential Proclamation, importers of record will also need to pay keen attention to value for duty reporting rules specified in Presidential Proclamations and US CBP guidance on the same. Such rules have caused some confusion in the past and resulted in litigation in the US Court of International Trade, with the US CBP auditing and disputing certain cost deductions made by steel importers that were not permitted under Transaction Value.
Experienced Trade Counsel can assist businesses getting
the value for duty of their steel imports correct!
Takeaways
Getting the value for duty of steel imports right is not always a straightforward matter. Experienced Trade Counsel can provide the specialized advice necessary to help businesses get the value for duty of their steel imports correct!
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