CLA-2-18:OT:RR:NC:N5:232
Mr. Abel Medina
Parkerco, Inc.
4694 Jaime J. Zapata Avenue
Brownsville, TX 78521
RE: The tariff classification, country of origin and eligibility under the United States-Mexico-Canada
Agreement (USMCA) for a Sugar Lactose Cocoa Powder Blend (SLCBP) from Mexico
Dear Mr. Medina:
In your letter dated July 23, 2025, you requested a ruling on the tariff classification, country of origin, and
eligibility under the USMCA of a Sugar Lactose Cocoa Powder Blend on behalf of your client, Santos USA
Corp. (Houston, TX). An ingredients breakdown, production description, and product specifications
accompanied your inquiry.
The subject merchandise is described as a Sugar Lactose Cocoa Powder Blend (hereinafter SLCBP)
composed of a dry mixture of 94.9 percent refined sugar, 4.1 percent lactose powder, and 1 percent cocoa
powder. The sugar in the SLCBP is stated to be grown and refined in Mexico and have a polarity of 99.9
degrees. The lactose is described as a product of the United States. The cocoa powder is said to be produced
in the Netherlands from cocoa beans sourced from non-USMCA countries that include Ivory Coast, Ghana,
Nigeria, and Cameroon. The ingredients are processed, blended, and packed in Mexico. The finished
SLCBP will be imported in railcars and used to make chocolate candy and candy bars.
Classification:
The applicable subheading for the SLCBP will be 1806.10.4500, Harmonized Tariff Schedule of the United
States (HTSUS), which provides for: “Chocolate and other food preparations containing cocoa: Cocoa
powder, containing added sugar or other sweetening matter: Containing 90 percent or more by dry weight of
sugar: Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to
chapter 17: Described in additional U.S. note 7 to chapter 17 and entered pursuant to its provisions.” The
general rate of duty will be 10 percent ad valorem.
If the quantitative limits of additional U.S. note 7 to chapter 17 have been reached, the SLCBP will be
classified in subheading 1806.10.5500, HTSUS, and dutiable at the rate of 33.6 cents per kilogram. In
addition, products classified in subheading 1806.10.5500, HTSUS, will be subject to additional duties based
on their value, as described in subheadings 9904.17.17 to 9904.17.48, HTSUS.
Products of Mexico as provided by heading 9903.01.01 in Section XXII, Chapter 99, Subchapter III, U.S.
Note 2(a), HTSUS, other than products classifiable under headings 9903.01.02, 9903.01.03, 9903.01.04, and
9903.01.05, HTSUS, will be subject to an additional 25 percent ad valorem rate of duty. At the time of entry,
you must report the applicable Chapter 99 heading, i.e. 9903.01.01, in addition to subheading 1806.10.4500,
HTSUS, listed above. Articles that are entered free of duty under the terms of general note 11 to the HTSUS
(U.S.-Mexico-Canada Agreement (USMCA)), including any treatment set forth in subchapter XXIII of
Chapter 98 and subchapter XXII of chapter 99 of the HTSUS, will not be subject to the additional ad valorem
duties provided for in heading 9903.01.01. If your product is entered duty free as originating under the
USMCA, you must report heading 9903.01.04, HTSUS, in addition to subheading 1806.10.4500, HTSUS.
Effective April 5, 2025, Executive Orders implemented “Reciprocal Tariffs.” All imported merchandise
must be reported with either the Chapter 99 provision under which the reciprocal tariff applies or one of the
Chapter 99 provisions covering exceptions to the reciprocal tariffs. At this time, products of Mexico are not
subject to reciprocal tariffs. At the time of entry, you must report the Chapter 99 heading applicable to your
product classification, i.e. 9903.01.26, in addition to subheading 1806.10.4500, HTSUS, listed above.
The tariffs and additional duties cited herein are current as of this ruling’s issuance. Duty rates are provided
for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying
duty rates are provided at https://hts.usitc.gov/.
Country of Origin Marking:
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless
excepted, every article of foreign origin (or its container) imported into the U.S. 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 U.S. the English name of the country
of origin of the article.
The “country of origin” is defined in 19 CFR 134.1(b) 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 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.”
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
§§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 goods which are subject to the
provisions of 19 C.F.R. § 102.21. Applied in sequential order, the required hierarchy establishes that: (a) 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 section 102.20 and satisfies any other applicable requirements of that section, and all other
requirements of these rules are satisfied.
The subject merchandise is neither “wholly obtained or produced” nor “produced exclusively from domestic
materials.” Therefore, Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case
because the SLCBP is neither wholly obtained nor produced exclusively from “domestic” (Mexico, in this
case) materials. Accordingly, we look to section 102.11(a)(3). The applicable tariff shift requirement in
section 102.20 for the SLCBP of subheading 1806.10, HTSUS, consists of the following:
A change to subheading 1806.10 from any other heading, except from heading 1805 or from Chapter 17; or
A change to subheading 1806.10 from Chapter 17, provided that the good contains less than 65 percent by
dry weight of sugar.
Because the foreign materials, cocoa powder and lactose, contained in the SLCBP are classified in
subheading 1805.00 and 1702.11 within the heading 1805 and Chapter 17, the tariff shift rule is not satisfied.
We note that Section 102.13 provides for a de minimis exception for foreign materials that do not undergo
the applicable change in tariff classification required in §102.20. Section 102.13(a) provides:
Except as otherwise provided in paragraphs (b) and (c) of this section, foreign materials that do not undergo
the applicable change in tariff classification set out in §102.20 or satisfy the other applicable requirements of
that section when incorporated into a good shall be disregarded in determining the country of origin of the
good if the value of those materials is no more than 7 percent of the value of the good or 10 percent of the
value of a good of Chapter 22, Harmonized System.
Based on the information provided, the total value of the foreign materials used in the production of the good
that fail to meet the required tariff shift exceeds 10 percent of the value of the good. Therefore, those
materials cannot be disregarded under the de minimis provision in 19 C.F.R. § 102.13.
Since an analysis of section 102.11(a)(3) has not produced a country of origin determination, we turn to
section 102.11(b) of the regulations.
Section 102.11(b) states, in relevant part:
Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set
pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under
paragraph (a) of this section:
(1) The country of origin of the good is the country or countries of origin of the single material that imparts
the essential character to the good, or…
When determining the essential character of a good under 19 C.F.R. §102.11, 19 C.F.R. §102.18(b)(1)
provides that only domestic and foreign materials that are classified in a tariff provision from which a change
in tariff classification is not allowed under the §102.20 specific rule or other requirements applicable to the
good shall be taken into consideration.
In this case, the domestic material, sugar of Mexican origin, is classified in heading 1701 within Chapter 17,
which is a provision from which a change in tariff classification is not allowed under the tariff shift rule.
Therefore, neither the foreign materials, namely, lactose of U.S. origin, nor the domestic materials, namely,
sugar of Mexican origin, undergo the applicable tariff shift. Therefore, both materials merit equal
consideration for determining the essential character of the product.
Section 102.18(b)(2) provides, in relevant part:
For purposes of determining which one of two or more materials described in paragraph (b)(1) of this section
imparts the essential character to a good under §102.11, various factors may be examined depending upon the
type of good involved. These factors include, but are not limited to, the following:
(i) The nature of each material, such as its bulk, quantity, weight or value; and (ii) The role of each material
in relation to the use of the good.
In this instance we find that the Mexican sugar provides the essential character of the SLCBP as the sugar is
the greatest by value and weight of any item used to make the SLCBP. Therefore, in accordance with 19
C.F.R. §102.11(b)(1), the country of origin of the SLCBP for origin and marking purposes is Mexico.
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(b) sets forth the criteria for determining whether a good
is an originating good for purposes of the USMCA. GN 11(b) states the following:
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));
For goods classified under subheading 1806.10.4500, HTSUS, the applicable Rule of Origin requires the
following: “A change to subheading 1806.20 from any other heading.”
Here, none of the nonoriginating materials used in the production of the good are classified in heading 1806.
Accordingly, the good qualifies as originating under the USMCA because it meets the requirements of
HTSUS General Note 11(b)(iii). The merchandise will therefore be entitled to a free rate of duty under the
USMCA upon compliance with all applicable laws, regulations, and agreements.
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 merchandise is subject to The Public Health Security and Bioterrorism Preparedness and Response Act
of 2002 (The Bioterrorism Act), which is regulated by the Food and Drug Administration (FDA).
Information on the Bioterrorism Act can be obtained by calling FDA at (301) 575-0156, or at the Web site
www.fda.gov/oc/bioterrorism/bioact.html.
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 Frank Troise at [email protected].
Sincerely,
(for)
James Forkan
Acting Director
National Commodity Specialist Division