The Directorate of Defense Trade Controls (DDTC) that administers and enforces the ITAR also issues Advisory Opinions (AO). What the heck is an AO? If you come from a Customs compliance background you know about Customs rulings and may have applied for some. An AO is sort of like a Customs ruling in that it is a written interpretation of the regulations.
New tariffs, changed tariffs, and reduced tariffs are announced with short notice. The duties on merchandise can change while a shipment is in the middle of the ocean. The status of free trade agreements has become uncertain. New detailed duties are assessed on steel and aluminum and their derivatives. Artificial intelligence is playing an increasing role.
Prior to August 29 of this year, 19 USC 321 – popularly known as a Section or de minimis clearance – allowed imported shipments valued at less than $800 to enter the US free of duty and entry requirements. The idea behind this was (1) the cost of processing an entry and duty payment would be more than the duty collected, and (2) setting the threshold at this level would promote eCommerce. It would also allow US Customs & Border Protection (CBP) to use its resources more effectively.
In a recent Federal Register notice the Bureau of Industry & Security (BIS) of the Department of Commerce announced that “On May 1, 2025, the Secretary of Commerce initiated an investigation to determine the effects on the national security of imports of commercial aircraft and jet engines, and parts for commercial aircraft and jet engines. This investigation has been initiated under section 232 of the Trade Expansion Act of 1962, as amended (Section 232).” The investigation may take up to 270 days but it can be concluded sooner.
As is well known the US has imposed duties of 25% on imports from Canada and Mexico. This means that those imports will take the regular duty plus 25%. For example, a switchgear assembly classified under 8537.10.91 made in Canada or Mexico will take a duty of 2.7% plus the special tariff of 25% for a total rate of 27.7% of the value.
On October 23, 2024, the Directorate of Defense Trade Controls published proposed changes to the International Traffic in Arms Regulations (ITAR) affecting exports of spacecraft and launch vehicles and related activities. Subsequently the department extended the comment period from Nov. 22 to Dec. 23, 2024. The Bureau of Industry & Security (BIS) of the Department of Commerce published corresponding proposed changes to the Export Administration Regulations on Oct. 23, 2024.
Not only are shipments under $800 exempt from duty but they are also exempt from Section 301 duties on Chinese products, Consumer Product Safety Commission requirements, import quotas and other requirements. Although they are supposed to be subject to Antidumping and Countervailing duty and Food & Drug Administration requirements, many low value shipments pass through the system without meeting these requirements.
A product has a country of origin of China, is not subject to China 301 duties and is eligible for USMCA benefits when imported from Canada – Whaaat!?
Canada has long enjoyed International Traffic in Arms Regulations (ITAR) license exemptions and minimal controls for items subject to the Export Administration Regulations (EAR). What about some of our other friends, such as Australia and United Kingdom? There are ITAR license exemptions for these countries in Parts 126.16 and 126.17 of the ITAR.
The First Sale Rule applies in circumstances such as the example above. A US company places an order with a middleman in the US. The middleman in turn subcontracts to a foreign supplier. The supplier then ships the product either to the middleman or to the original US company that placed the order, meaning either could be the importer of record. The entered value could be the amount on the original purchase order or the price paid by the middleman to the foreign supplier.