OT:RR:CTF:VSP H350697 ACH
Ms. Suzanne Kane
Akin Gump Strauss Hauer & Feld LLP
2001 K Street, N.W.
Washington, DC 20006-1037
Re: Country of origin marking of a Smartwatch; Section 301
Dear Ms. Kane:
This is in response to your correspondence, dated July 17, 2025, requesting a binding
ruling, on behalf of your client, [ ] concerning the country of origin for marking purposes and the
applicability of the Section 301 measures set forth in U.S. Note 20 to Subchapter III, Chapter 99,
Harmonized Tariff Schedule of the United States (“HTSUS”), to a Smartwatch.
You have requested that certain information submitted in connection with this request be
treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R.
§ 177.2(b)(7), the request for confidentiality is approved. The information bracketed in your
request will not be released to the public and will be withheld from published versions of this
ruling.
FACTS:
The Smartwatch is a wrist-wearable device that enables the wearer to both engage with
multiple communications and utility applications on the watch as a standalone device, and to
wirelessly integrate with connected smart devices, such as a smartphone or wirelessly connected
smart glasses. The Smartwatch enables users to query and interact with their surroundings using
an integrated camera through multi-modal artificial intelligence (“MMAI”) functionalities;
support health and fitness goals through onboard health sensors and other health and fitness
artificial intelligence (“AI”) features; and engage with core smartwatch utilities such as
timekeeping, calendars, reminders, notifications, and activity and fitness tracking.
Users interact with the Smartwatch through industry-standard input/output components,
including: a touchscreen display; an onboard speaker and microphone array; and a linear
resonant actuator (“LRA”) haptics engine. In addition, the Smartwatch enables the wearer to
provide input through wrist movements and hand gestures detected by electromyography sensors
(i.e., electrodes) which measure electrical activity that is generated when the wearer activates the
muscles in their forearm and wrist. The Smartwatch can interpret the electromyography signals
from the users’ wrist as gesture input for on-watch experiences or connected devices, e.g., paired
smart glasses. The Smartwatch also includes other typical sensors such as an inertial
measurement unit (“IMU”) to sense motion (e.g., a raised or lowered wrist) as well as gesture
input and fitness activity, GPS and barometer for determining location and altitude, and a
photoplethysmography (“PPG”) module for heart rate monitoring and other health and fitness
tracking functions.
The Smartwatch contains a main logic board (“MLB”) that is equipped with a chipset
including System-on-Chip (“SoC”) and microcontroller unit (“MCU”) components that
collectively provide high-and low-power compute and Bluetooth and Wi-Fi connectivity. The
MLB also contains subcomponents such as operational amplifiers, analog to digital converters,
processors, and system memory components.
The Smartwatch utilizes electrodes on both the underside of the top capsule (“Bottom
Case”) and in the elastomer watch band to house the sensors and supporting components which
process the user’s gesture signals to enable gesture input through the MLB. The underlying
functionality of the sensors and the products is realized through creation of the MLB through the
surface-mounting (“SMT”) process, with the final electrical circuitry being established and the
factory operating system software (“OS”) being installed and tested to ensure the Smartwatch
will function as intended.
To support the above-described features and functions, the Smartwatch is projected to
contain over 1,000 individual components that will be incorporated into several modules. These
modules include:
The MLB (surface-mounted in Vietnam). The MLB is a specialized printed
circuit board assembly (“PCBA”) that is the product of extensive research, design,
development, and engineering by a dedicated team. The MLB is designed
specifically to fit the wrist-worn form and sensor functionality of the Smartwatch.
It will contain between 600 and 700 components that collectively enable the
user’s smartwatch experience and the wireless control of a paired smart device
(e.g., smart glasses). The MLB comprises approximately 60 percent of the total
project bill of materials (“BOM”) for the Smartwatch componentry, and these
components are integrated by an SMT process in Vietnam.
o Among other components, the MLB will include:
An SoC that runs the operating system and functions as the high-
power processor, providing active Smartwatch software
experiences including AI, multimedia functions, and other general-
purpose compute applications;
An MCU that functions as the low-power, always-on co-processor
for display, audio, touch input, and sensor compute, as well as
WiFi and Bluetooth connectivity;
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An operational amplifier that amplifies the electromyography
signals measured for analog to digital conversion and sensor
integration components;
An analog to digital converter (“ADC”) chip that converts the
analog signals from the operation amplifier to digital signals;
A second MCU co-processor that processes the digitized
electromyography and IMU signals from the user into the detected
gestures;
The memory components (flash and pseudostatic random-access
memory (“DDR and PSRAM”) that will store the necessary
operating system and application, software, firmware and machine
learning models needed for product functionality; and
The power management integrated circuit (“PMIC”) chipset that
manages the energy and power used by the various components of
the Smartwatch.
o The combination of these components, in their specific configurations on
the MLB, imparts the ability of the MLB (and in turn the Smartwatch) to
support both traditional smartwatch functions as well as integration with
other smart devices and novel inputs, in a power-efficient manner to
enable all-day wear.
The Smartwatch also includes the following top components by value:
The Sensor Board (auxiliary PCBA surface-mounted in Vietnam). Together, the
MLB and Sensor Board account for nearly 98 percent of the total BOM
components.
The Display Module Flex (manufactured in Vietnam).
The Smart Band Flex (manufactured in China).
The Sensor Flex (manufactured in China).
The Molded Band (manufactured in China).
The Assembly Display (manufactured in Vietnam).
Production of the Smartwatch will occur in three main stages: (1) the production of
individual components in 13 countries including Vietnam, Taiwan, Japan, China, the United
States, South Korea, the Philippines, Germany, Italy, Malaysia, Thailand, Mexico, and
Singapore; (2) production of the main PCBA (i.e., the MLB) in Vietnam by means of SMT; and
(3) final assembly, testing, and packaging (“FATP”) in China. The Chinese components make
up approximately 60 percent of the components’ cost, and the Taiwanese components make up
almost 11 percent of the components’ cost. The remaining countries each make up less than 6
percent of the components’ cost.
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After SMT, the completed PCBA will be shipped to China for FATP. The company
claims that none of the steps involved in FATP alter the characteristics of the MLB that emerge
during the SMT process. The FATP process includes:
offline assembly, which takes over ten minutes and includes pre-bending,
assembling brackets, pasting foam, and pasting adhesives to connect assemblies
together.
MLB Sub-Assembly, which includes pasting conductive foam and adhesive,
assembling with active adhesives, placing connective tape, and buckling
connectors and takes less than 10 minutes.
Inner Band Sub-Assembly, which includes cleaning bonding surfaces, utilizing
prebonding equipment to bond components together, and conducting bond
function tests and takes over ten minutes.
Bottom Cover and Housing Sub-Assembly, which includes screwing, lubricating
rings, leak tests, pasting, peeling, and measuring and takes over 30 minutes.
Main Line Assembly, which includes screwing, buckling, locating and securing
modules, pasting foils, pressing and oven baking, various functionality and
cosmetic inspections and tests, and measuring and takes over 50 minutes.
Packaging, which takes nearly 20 minutes.
ISSUES:
(1) What is the country of origin for marking purposes of the Smartwatch?
(2) Whether the Smartwatch is subject to Section 301 measures
LAW AND ANALYSIS:
(1) What is the country of origin for marking purposes of the Smartwatch?
The marking statute, Section 304(a), Tariff Act of 1930, as amended (19 U.S.C.
§ 1304(a)), provides that, unless excepted, “every article of foreign origin (or its container …)
imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and
permanently as the nature of the article (or container) will permit in such manner as to indicate to
an 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 imported goods the country of which
the goods {are} 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.” United States v.
Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940). Part 134 of Title 19 of the Code of Federal
Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C.
§ 1304. 19 C.F.R. § 134.1(b) provides as follows:
(b) Country of origin. “Country of origin” means 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
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country must effect a substantial transformation in order to render such
other country the “country of origin” within the meaning of this part;
however, for a good of a NAFTA or USMCA country, the marking rules set
forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules)
will determine the country of origin.
The test for determining whether a substantial transformation occurs 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. Texas Instruments Inc. v. United States, 681 F.2d 778 (CCPA 1982).
This determination is based on the totality of the evidence. National Hand Tool Corp. v. United
States, 16 Ct. Int’l Trade 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). The U.S. Court
of International Trade (“CIT”) has stated that “if the manufacturing or combining process is
merely a minor one which leaves the identity of the imported article intact, a substantial
transformation has not occurred.” Uniroyal, Inc. v. United States, 542 F. Supp. 1026, 1029 (Ct.
Int’l Trade 1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) (per curiam).
To determine whether a substantial transformation occurs when components of various
origins are assembled into completed products, CBP considers the totality of the circumstances
and makes such determinations on a case-by-case basis. The country of origin of the item’s
components, extent of the processing that occurs within a country, and whether such processing
renders a product with a new name, character, or use are primary considerations in such cases.
Additionally, factors such as the resources expended on product design and development, the
extent and nature of post-assembly inspection and testing procedures, and worker skill required
during the actual manufacturing process may be considered when determining whether a
substantial transformation has occurred. No one factor is determinative. See e.g., Headquarters
Ruling Letter (“HQ”) H311606, dated June 16, 2021, and HQ H302801, dated October 3, 2019.
The CIT has indicated that “{f}or courts to find a change in character, there often needs
to be a substantial alteration in the characteristics of the article or components.” Energizer
Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (2016) (citing Ran-Paige Co., Inc. v.
United States, 35 Fed. Cl. 117, 121 (1996) and Nat’l Hand Tool Corp., 16 Ct. Int’l Trade at 311).
Courts have also considered “the ‘essence’ of a completed article to determine whether an
imported article has undergone a change in character as a result of post importation processing.”
Id. (citing Uniden America Corp. v. United States, 120 F. Supp. 2d 1091, 1095-1098 (Ct. Int’l
Trade 2000) and Uniroyal, Inc., 542 F. Supp. 1030). In Uniroyal, Inc., the court determined that
the shoe upper was “the very essence of the completed shoe” and that the attachment of the
imported shoe uppers to an outer sole in the United States was a “minor manufacturing or
combining process which leaves the identity of the upper intact,” therefore, the shoe upper was
not substantially transformed in the United States. 542 F. Supp. at 1029-1030. The court also
noted that the minor assembly operation in the United States “require{d} only a small fraction of
the time and cost involved in producing the uppers.” Id. at 1030.
The subject Smartwatch is similar in some ways to the wearable electronic smart device
in HQ H302801. In that ruling, CBP considered the country of origin of a Fitbit device. CBP
determined that as in HQ H287548, dated March 23, 2018; New York Ruling Letter (NY)
N303008, dated March 8, 2019; and HQ H301910, dated August 5, 2019, the Fitbit’s PCBA
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represented the essence of the Fitbit device because it incorporated the electronic components
that together gave the smart device its functionality and enabled the device to operate as
intended. In HQ H302801, CBP stated that “{t}he unique and full functionality of Fitbit’s
devices is only accessed once the components and subassemblies are integrated and populated
into the PCBA,” which is accomplished by using the SMT process in Taiwan or in another
country such as Malaysia or Indonesia. The individual components, such as the Bluetooth
transceivers, once incorporated into the PCBA through the SMT process, lose their identity
because they cannot “individually carry out the functions of … a smart watch or … track{} the
user’s fitness and activity,” and become “an integral part of the new article.” CBP further stated
that the final assembly process in China, which involved “{a}ttaching the PCBAs into the
housing with the vibration motor, battery, display, and wristband” did not render the PCBAs into
a product with a new name, character, or use. Moreover, CBP determined that the final assembly
process required less training for workers than the SMT process and was not time intensive.
Accordingly, CBP concluded that the final assembly process in China did not substantially
transform the PCBAs. CBP concluded that the SMT operations in Taiwan or in another country,
such as Malaysia or Indonesia, “result{ed} in a substantial transformation of the electronic
components from Taiwan and the Philippines into a new and different article of commerce with a
new name, character, and use distinct from the components.” Accordingly, CBP determined that
the country of origin for the Fitbit device was where the SMT operations occurred.
As in HQ H302801, the PCBAs in this case are the essence of the Smartwatch with a
different name, character and use than the components and blank circuit board that undergo the
SMT process. In the instant case, the Smartwatch is composed of over 1000 components,
between 600 and 700 of which are incorporated into the MLB using the SMT process in
Vietnam. When incorporated onto the printed circuit board, the individual components and the
blank printed circuit board develop a new name, a PCBA (here, known as the main logic board
or MLB).
The individual components and the blank circuit board undergo a change in character
when the components are assembled onto the blank circuit board and become a printed circuit
board assembly via the SMT process. Once they are incorporated together onto the PCBA, they
“become an integral part of the new article” and develop the functionality of the Smartwatch.
The PCBAs in the instant case, like the PCBAs in HQ H302801, form the “brain” of the device
and enable the device to function as intended by design. Through the SMT process the
components thereby change in character from individual components capable of limited
functions and a blank circuit board incapable of any functions to PCBAs that represent the
essence of the Smartwatch because they enable the Smartwatch to function.
The individual components and the blank circuit board undergo a change in use when the
components are assembled onto the blank circuit board and become the printed circuit board
assembly via the SMT process. Like some of the components in HQ H302801, the individual
components and blank circuit board are “stand-alone, general use items” that are usable in other
devices and do not alone accomplish the full functionality of the Smartwatch. In this case, the
PCBAs allow the device to run the operating system, control the display and visuals, and detect
and process the wearer’s gesture signals. Before the components are assembled onto the blank
circuit board, each of the individual components is only capable of limited functions and the
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blank circuit board is not capable of any functions. The functionality of the Smartwatch is
dependent on the collective capabilities of the MLB.
In light of these processes, the SMT operations result in a substantial transformation in
Vietnam of the components into a new and different article of commerce with a new name,
character, and use distinct from the individual components and the blank circuit board. See HQ
H311447, dated September 10, 2020 (stating that “CBP has consistently held that the assembly
of components onto a printed circuit board is a substantial transformation”), and HQ H302801.
After final assembly, the Smartwatch will undergo FATP. The FATP process takes more
time than the SMT operations. However, the MLB is not altered during the FATP process, and a
significant portion of the FATP process’s time is devoted to packing and testing, which would
not change the name, character, or use of the Smartwatch. Therefore, even though this process is
more time intensive, it will not change the name, character, or use of the article and therefore
does not constitute substantial transformation.
Based on the facts presented, we conclude that the MLBs impart the character of the
Smartwatch. The Smartwatch is a product of Vietnam, where the SMT operations take place to
manufacture the PCBAs. The Smartwatch should be marked accordingly at the time of
importation into the United States.
(2) Whether the Smartwatch is subject to Section 301 measures?
The United States Trade Representative (“USTR”) has determined that an additional ad
valorem duty will be imposed on certain Chinese imports pursuant to USTR’s authority under
Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). See Section XXII, Chapter
99, Subchapter III, U.S. Note 20, HTSUS. The substantial transformation analysis is applicable
when determining the country of origin for purposes of applying Section 301 measures. See HQ
H301494, dated October 29, 2019, and HQ H301619, dated November 6, 2018.
In this case, the Smartwatch is not subject to the additional Section 301 measures because
the country of origin of the Smartwatch is Vietnam, where the MLBs are manufactured via SMT
operations.
HOLDING:
The country of origin of the Smartwatch for purposes of marking and for purposes of
additional Section 301 measures is Vietnam. Therefore, the Smartwatch is not subject to Section
301 measures.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “{e}ach ruling letter is issued on
the assumption that all of the information furnished in connection with the ruling request and
incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and
complete in every material respect. The application of a ruling letter by a Customs Service field
office to the transaction to which it is purported to relate is subject to the verification of the facts
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incorporated in the ruling letter, a comparison of the transaction described therein to the actual
transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this
merchandise is entered. If the documents have been filed without a copy, this ruling should be
brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika Brenner, Chief
Valuation and Special Programs Branch
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