RE: The country of origin of brake hubs

U.S. Department of Homeland Security U.S. Customs and Border Protection National Commodity Specialist Division One World Trade Center, Suite 51.201 New York, NY 10007 U.S. Customs and Border Protection N364352 September 2, 2026 OT:RR:NC:N2:206 CATEGORY: Origin Clarissa Photikarmbumrung MAT Holdings, Inc. 6700 Wildlife Way Long Grove, IL 60074 RE: The country of origin of brake hubs Dear Ms. Photikarmbumrung: In your letter, dated August 17, 2026, you requested a country of origin ruling on brake hubs for marking purposes; for purposes of applying trade remedies under Section 301, as amended, from China, and additional duties; and applicability of the United States-Mexico-Canada Agreement (USMCA). The articles under consideration are described as a Front Hub-drum Assembly (high-runner), Part Number (PN) MHP-A001ALP; Front Assembly, PN 243076, and Rear Assembly, PN 343076. Each assembly consists of a hub, wheel stud, bearing cup, and tone ring. Additionally, PN MHP-A001ALP contains an oil port plug; PN 243076 has a front brake drum, nut, and an outer bearing cup; and PN 343076 has a rear brake drum, flange stud, nut, and an outer bearing cup. The articles are designed to be used with heavy-duty trucks as original equipment manufacturers (OEM) goods. You state that the hubs for each assembly are imported to Mexico from China in a rough, unfinished state. In Mexico, the hubs undergo computer numerical control (CNC) turning, hole drilling, thread tapping, and countersinking. Then, the bearing cups from China and Thailand, tone ring, and studs are hydraulically pressed into the holes. Finally, the brake drums of Mexican origin are mechanically coupled with the hubs. Marking: Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States, the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” See United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940).
Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of the marking laws and regulations. Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in sections 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile and apparel goods which are subject to the provisions of 19 CFR 102.21. See 19 CFR 102.11. Applied in sequential order, 19 CFR 102.11(a) provides that the country of origin of a good is the country in which: (1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or (3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. The products at issue are neither "wholly obtained or produced" nor "produced exclusively from domestic materials." Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the items, and paragraph (a)(3) must be applied next to determine the origin of the finished articles. The hubs are classified under subheading 8708.99, Harmonized Tariff Schedule of the United States (HTSUS). The tariff shift requirement in Part 102.20 for the item at issue states: A change to subheading 8708.99 from any other subheading, except from parts or accessories of the goods of subheading 8708.40, 8708.50, 8708.80, 8708.91, 8708.92, 8708.94, or 8708.95. None of the separate components of the hubs is classified in subheading 8708.99, HTSUS, or any of the listed excepted subheadings. As a result, the tariff shift is met and the Front Hub-drum Assembly (high-runner), PN MHP-A001ALP; Front Assembly, PN 243076, and Rear Assembly, PN 343076 can be marked as products of Mexico. Additional Duties: When determining the country of origin for purposes of applying current trade remedies under Section 301 and additional duties, the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling Letter H301619, dated November 6, 2018. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, or use different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 681 F.2d 778 (C.C.P.A. 1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). It has been a long-standing CBP position that assembly of components does not result in a substantial transformation. You state that “[t]he imported Chinese component is not commercially usable as a brake hub prior to its processing in Mexico. Being a raw casting, it cannot be installed in any vehicle or integrated with other automotive systems.” In National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), the court considered sockets and flex handles which were either cold formed or hot forged into their final shape prior to importation, speeder handles which were reshaped by a power press after importation, and the grip of flex handles which were knurled in the U.S. The court found that the drill
bit blanks underwent no significant change in character or use when they were processed into the finished drill bits in China. In other words, the drill bit blanks had the very essence of the finished drill bits and the processing that was performed in China did not change the shape, character or predetermined use of the drill bits. Similarly in this case, the processes that occur in Mexico do not render the Chinese components a new name, character or use. The end-use of the components from China is predetermined before they arrive in Mexico for further processing and assembly, as the hubs are recognizable as such. Furthermore, the assembly of the components with the rest of the China-sourced parts does not result in a substantial transformation in Mexico. As a result, it is the opinion of this office that the country of origin of the Front Hub-drum Assembly (high-runner), PN MHP-A001ALP; Front Assembly, PN 243076, and Rear Assembly, PN 343076 will be China for purposes of applying trade remedies under Section 301, as amended, from China, and additional duties. USMCA: The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note ("GN") 11 of the HTSUS implements the USMCA. GN 11(a)(i) provides that: (a) Goods originating in the territory of a country named herein, pursuant to the United States-Mexico-Canada Agreement (USMCA), are subject to duty as provided herein, including any treatment set forth in subchapter XXIII of chapter 98 and subchapter XXII of chapter 99 of the tariff schedule. For the purposes of this note, as provided in the tariff schedule— (i) Goods that originate in the territory of Mexico, Canada or the United States (hereinafter referred to as “USMCA country” or “USMCA countries” as further defined in subdivision (l)(xxiv) of this note) under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury (including Uniform Regulations provided for in the USMCA), and goods enumerated in subdivision (p) of this note, when such goods are imported into the customs territory of [sic] the United States and are entered under a subheading for which a rate of duty appears in the “Special” sub-column, followed by the symbol “S” in parentheses, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act; GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states: (b) For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a "good originating in the territory of a USMCA country" only if (i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; (ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
(iii) the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); In this instance, the hubs will be produced in Mexico using originating and non-originating materials. Therefore, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i), nor are the products produced exclusively from originating materials per GN 11(b)(ii). Thus, we must determine whether the hubs qualifiy under GN 11(b)(iii). As previously noted, the hubs are classified under subheadings 8708.99, HTSUS. The applicable rule of origin for goods classified under subheading 8708.99, HTSUS, is in GN 11(o)/87.08 (53) is underscored and requires: (A) A change to subheading 8708.99 from any other heading; or (B) No change in tariff classification to a good of subheading 8708.99, provided there is a regional value content of not less than 70 percent under the net cost method. As stated above, none of the Chinese or Thai components are classified in subheading 8708.99, HTSUS. As a result, the tariff shift is satisfied. Subheading rule: The underscoring of the designations in subdivisions 50 through 55 pertain to goods provided for in heading 8708.99… If the good is any other good for use in a heavy truck, Article 4.2 of the automotive appendix applies… GN 11(k) provides special rules for automotive goods. GN 11(k)(i) provides that: An automotive good and other motor vehicles and parts described herein shall be subject to applicable requirements set forth in this paragraph, including, with respect to a passenger vehicle or light truck that has been authorized to use the alternative staging regime described under subparagraph (viii), applicable requirements for the duration of the alternative staging period specified in the approval. GN 11(k)(ii)(E)(2) includes in the definition of an “automotive good” any “part, component or material listed in table A.1, A.2, B, C, D, or E of the automotive appendix, subject to any provisions that may be included in regulations issued by the Secretary of the Treasury.” GN 11(k)(ii)(D) defines “automotive appendix” as “. . . the Appendix to Annex 4-B of the USMCA (relating to the product-specific rules of origin for automotive goods, as reflected in subdivision (o) of this note).” Examining Table D of the automotive appendix, entitled “Principal Parts for Heavy Trucks,” the subject merchandise is listed (“8708.99 – other parts of vehicles”) and is for use in a heavy truck. The Note to Table D in the automotive appendix provides that “[t]he Regional Value Content requirements set out in Article 4 of this Appendix apply to a good for use in a heavy truck.” Article 4.2 of the automotive appendix states that: Notwithstanding Article 2 (Product-Specific Rules of Origin for Vehicles) and the Product-Specific Rules of Origin in Annex 4-B, each Party shall provide that the regional value content requirement for a part listed in Table D of this Appendix that is for use in a heavy truck is: 64 percent under the net cost method or 74 percent under the transaction value method, if the corresponding rule includes a transaction value method, beginning on January 1, 2023, or four years after the date of entry into force of this Agreement, whichever is later; and 70 percent under the net cost method or 80 percent under the transaction value method, if the
corresponding rule includes a transaction value method, beginning on January 1, 2027, or seven years after the date of entry into force of this Agreement, whichever is later, and thereafter. In addition to the provisions of the automotive appendix and GN 11, as indicated in GN 11(a)(i), the trilaterally agreed USMCA Uniform Regulations in Appendix A of 19 C.F.R. Part 182 provide further guidance on the interpretation and application of the USMCA rules of origin. The Note to Table D in the Uniform Regulations clarifies that: The Regional Value Content requirements set out in sections 13 or 15 or Schedule I (PSRO Annex) apply to a good for use as original equipment in the production of a heavy truck. For an aftermarket part, the applicable product-specific rule of origin set out in section 13 or Schedule I (PSRO Annex) is the alternative that includes the phrase “for any other good.” Accordingly, the Uniform Regulations draw a distinction between aftermarket parts and automotive parts that are used as original equipment in the production of a vehicle. See Section 12(1) (“aftermarket part means a good that is not for use as original equipment in the production of passenger vehicles, light trucks or heavy trucks as defined in these Regulations.”). Since the hubs at issue are OEM goods, the RVC must be met in addition to the tariff shift. However, you have not provided us with adequate bills of materials to calculate the RVC for each product. Accordingly, the USMCA eligibility cannot be determined. The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP. This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection Regulations (19 C.F.R. 177). A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, please contact National Import Specialist Liana Alvarez at [email protected]. Sincerely, (for) James P. Forkan Director National Commodity Specialist Division