A proposed modification of U.S. Customs and Border Protection’s (CBP) classification standards for women’s blouses has left the industry reeling.
In the wake of a dramatic and seemingly unending trade war, footwear and apparel brands are feeling the strain of increased duties on their Chinese-made products. Last week, the American Apparel and Footwear Association (AAFA) addressed the Trade and Commercial Regulations Branch of CBP in an open letter, hitting back against the agency’s proposed changes from a November memorandum.
AAFA president and CEO Rick Helfenbein decried the effort, citing his organization’s role as “the trusted public policy and political voice of the apparel and footwear industry, its management and shareholders, its nearly four million U.S. workers, and its contribution of more than $400 billion in annual U.S. retail sales.”
CBP’s new proposals could increase tariffs on a number of women’s shirt styles, and the alterations to rulings NY N019202, NY N018064 and NY M80970 could have far-reaching implications for U.S. apparel brands, he argued.
In addition to overturning “decades of precedent and industry best practice,” the modification of the three rulings in question would “create tremendous confusion.” The changes will impact at least seven other rulings, and potentially dozens more, he argued.
The three rulings up for review pertain to blouse styles with partial openings around the neck that CBP believes defy classification under the current 6106 HTSUS heading, because they don’t “have a means of closure,” like buttons. The agency has modified all three rulings to remove language indicating that a means of closure is necessary for garments under that heading—meaning that they will now be classified under heading 6106 HTSUS.
The agency’s modifications to the rulings are slated to go into effect 60 days after publication in the Customs Bulletin.
AAFA’s Helfenbein asserted that such a change would “have a huge tariff impact on what is one of the largest apparel categories on the market—women’s cotton tops.”
Already, this category is subject to a “crazy” 31.5 percent tariff, including the latest 15 percent China Section 301 punitive tariff, he said. The proposed reclassification would “add insult to injury,” driving up the total tax on these blouses and tops to 34.7 percent.
While Helfenbein admitted that CBP was correct in its assessment that there is “no specific requirement in the HTSUS for a means of closure for a garment with a partial opening to be classified in HTS Heading 6106,” the agency itself was responsible for establishing a means of closure requirement “as the de facto standard through decades of precedent,” he said, going back to at least 1996.
Overturning the precedent now would jeopardize dozens of historical rulings and decades of industry practice, he said.
The proposal also “breaks new ground” and “injects new uncertainty” given its proposed modification of ruling NY M80970, which claims that the product in question does not have full or partial openings starting at the neckline. This casts doubt on what constitutes a full or partial neckline opening, fueling questions rather than providing answers, Helfenbein said.
The agency’s proposal would “open a Pandora’s Box of confusion and uncertainty for industry, and CBP, that would likely take years, if not decades, to fix,” Helfenbein said.
The AAFA chief concluded the correspondence with an urgent plea that CBP withdraw its proposal immediately—a request to which the agency has yet to respond.