Tuesday, December 20, 2016


I wrote here about purchasing bikes in the UK for delivery in the US.  Lots of great reasons to do this.  One big one to avoid it.

(A note about the below:  I am a lawyer.  But I do not do this kind of work.  If you interpret this as legal advice, it is worth exactly what you are paying for it.)

Import Duties

US Citizens must pay duties on anything over $800 that they import even if for personal use.  That $800 used to be more like $200, so be happy.  According to Customs and Border Patrol:

This covers most new groupsets I might order from Merlin.
(More on that, including the link to the mentioned statutory provision and the promise of a new administrative rule (be still my beating heart), at this link.)

I once read online something about a "personal use" exemption.  That is what the $800 is.  Thus, you are not better off importing a bike because you plan to ride it rather than to sell it.  Your only chance of avoiding duties are (1) paying less than $800 (and even that is not 100%) or (2) getting lucky.

Note that duties depend on the country from which you are importing.  As Customs and Border Patrol clarifies:

Note what drives reduced or zero duties:  trade agreements.
Amazon also gives a helpful run-down of "customs duties for consumers".  Here it is at the Amazon site (link good as of Dec. 18, 2016).

If we have a trade agreement with a country or a region, that frequently includes low or no duty importing provisions.  According to the list in Title 19 of the Code of Federal Regulations (freely available from the Cornell Law Library, though not necessarily up to date; also available in a less usable though more reliably up-to-date form at this link) this includes such obvious places as Canada (OK, that one is obvious), Morocco and Bahrain.  The soon-to-be-defunct Trans-Pacific Partnership would have eliminated import duties on products from signatory nations.  The Trans-Atlantic Trade and Investment Partnership had similar goals for trade with European nations.

Thus -- and regrets, but this must be said -- the anti-globalization crowd is also an anti-cycling crowd, as the cost to purchase gear from outside the US is greater than it should be.  As I clarify further below, this is not just a question of import duties, but of indirect costs like broker fees as well.  So, if you are one of this group, merry fucking christmas to you, too.

What are the import duties?  That, it turns out, is a highly complex question.  There are two reasons.

  1. First, the duty depends on what it is you are importing.  
  2. Second, whoever wrote the catalog of duties, called the "Harmonized Tariff Schedule," was not a cyclist.  Or a clothier.  Or anything as best as I can tell.  Customs officials and merchants/afficionados apparently do not speak to each other very often.
I confine the rest of this discussion to bikes.  If you really want your eyebrows to arch, try clothing.  Second thought, better not.  Buy local, not because it makes any sense as economic or social policy (or morality) but because it is the only thing you will be able to afford.

Harmonized Tariff Schedule

You find this ridiculous exercise in government support of industry at the US International Trade Commission website.  Here is the front page.  If nothing else, give the ITC credit for not wasting money on a modern website.

ITC.  One wishes the agency would invest its savings in a rational set of regulations.
The schedule itself is here -- all 99 chapters and six appendices.  Interpreting it requires a dictionary and a mind-reader on speed-dial.  I started with the 80-page alphabetical index, available at the page linked immediately above.  And, sandwiched between "bibulous paper" and "bidets," I find "bicycle speedometers" and "bicycles."  Even the latter is broken into subcategories.

If you are curious, "bibulous paper" is, according to Wikipedia, "a highly absorbent type of paper . . . used to absorb an excess of liquid substances (such as ink or oil) from the surface of writing paper".

So -- bicycles.  It appears we go to Chapter 87.  Which bears the evocative title "Vehicles other than railway or tramway rolling stock, and parts and accessories thereof."  I scroll through the 28 pages in Chapter 87, past Tractors; Ambulances; "Motor cars and other motor vehicles principally designed for the transport of persons . . . including station wagons and racing cars"; mobile cranes; concrete mixers; parts and accessories for the above; Works trucks, self propelled; "Tanks and other armored fighting vehicles . . . whether or not fitted with weapons"; and know I am getting somewhat close when I see motorcycles and mopeds.

Bicycles show up at the end of this list in subchapter 12.  These are divided utterly irrationally as shown below:

How large is your front wheel?  I bet you don't know.

Note the tariffs imposed.  There is the "normal" rate, the "free" rate (including NAFTA countries Canada (CA) and Mexico (MX) and various others like Australia and Singapore), and the punitive rate.

Then note how you must seek to categorize your bike effectively.  The subchapter applies to all non-motorized bicycles "including delivery tricycles."  Aside:  what exactly is a delivery tricycle?  The normal tariff is 11% if both wheels do not exceed 63.5cm in diameter; other identifications including wheels smaller than 50cm and wheels between 50 and 55 cm keep the same rate.  On the other hand, wheels larger than 63.5cm in diameter get a 5.5% tariff if the bicycle weight is less than 16.3kg.

Initially, this really matters.  11% tariff on a $3000 bicycle is a $330 charge slapped on you at the border.  That pretty much defeats the advantage of buying from the UK (in my story) or most other places.  5.5% drops that to $165 -- still a chunk of change to the US Treasury for doing nothing other than pursuing my endless quest for N+1.

Second, categorizing is not simple.  How large is your bicycle wheel?  700c -- is that 700mm?  No, it turns out.

Diameter measured to include the tire.

Diameter measured to exclude the tire.

Approximating because trying to be precise seems just silly, I came up with 25" (picture above is misleading) measuring the outside diameter of a 700c rim.  25" is 62.5 cm.  With a tire -- a fat one, to be sure -- I get about 27.5" outside diameter, or more like 69 cm.  Which one to use?  It is a $165 question!

And heaven forefend you decide to purchase a Brompton from overseas, for which no matter what your measuring methodology you would be less than the magic 63.5cm measurement.  Note also the weight measurement of 16.3kg.  That is for the bike, not the packaging, and 16.3kg is about 36 pounds.  If I am buying a 36 pound bike I am not paying $3000 for it and ordering overseas!

This got particularly amusing because on one call I was misinformed as to the HTS rules and told the 5.5% applied if the wheel was *less than* 63.5cm in diameter.  I arranged with the seller to ship with tires removed to claim the better categorization.  Only to reverse myself when research proved the larger wheel provided the better tariff.

Is there a better deal?

One question:  can I game the categorization?  I looked at various options.  If I could claim this was a "carriage" for a disabled person, I could avoid tariffs altogether.  No problem, unless anybody looked.  (En route to the Vineman triathlon I once told a Southwest Airlines clerk my bike was a "racing wheelchair."  Literally true if obviously misleading.  She asked to see it; thank goodness for deep dish wheels, which threw her for a loop.)

If I could claim it was a motorcycle or moped I could get it in tariff free under subchapter 8711.  Almost worth asking the seller to include a battery propulsion system in the packaging!

Finally, there is a subcategory of "Other" with normal tariffs of 3.7%.  What is other?  I am sent to 9902.24.67 to find out.  Subchapter 9902 is a long list of random exceptions.  9902.24.67?  Unicycles.

See also the various parts and accessories in the nearby categories.
No way to fit my purchases into this grouping anywhere.

What country?

One more complication:  recall that the tariff depends on what country you import from.  What about buying a German bike, made of Taiwanese carbon fiber and Japanese components, from the UK?  Because neither Germany nor the UK is either tariff exempt or subject to punitive tarriffs, it turns out not to matter.  But if I bought the German bike from Singapore?

Title 19 of the Code of Federal Regulations governs "Customs Duties."  (You can find Title 19 of the CFR for free here, although remember the possible out-of-date caveat from above.)  Part 102 is Rules of Origin.  As a general matter, section 102.11 tells me, the country of origin is the country in which "the good is wholly obtained or produced."  If the parts come from various places, the country of origin would be the country from which the component part that imparts the essential character to the good.  For a bike?  One would be tempted to say the frame, although considering that the Harmonised Tariff Schedule asks about wheel size, perhaps the wheels impart the bike's "essential character"?

Finally, there is the additional wrinkle that the bike is used, meaningfully enough that it is not a fig leaf to hide a larger tariff from the US customs authorities.  Ultimately I have not resolved this additional question.  When my Focus Izalco Max Disc with Dura Ace cleared customs a JFK, I got stuck with a $180 tariff under the 8712.00.25 -- bicycle with wheels >63.5 cm and overall weight less than 16.3 kg -- categorization.

Customs Brokers

The tariff gets you halfway there.  Somebody has to walk this shipment through customs.  The problem, of course, is that with the infinite varieties of tariffs, dependent on product and on origin, customs officers won't simply accept an assertion as to what is in the box.  Otherwise, I would just call my bike a "racing wheelchair" and get away without paying the health tax.

But this post is a mammoth already.  Next: my saga figuring out how to manage customs brokers.


sam said...

My last overseas bike purchase, my Arkose, I ended up paying $145 in tariff on a ~$1200 bike. Interesting to see your data on how that was calculated. Yes, you would think there would be an active market in working around these tariffs, given the odd wording of the categories.

For example, manufacture sacrificial wheels that are intended to be thrown out, but meet the letter of the spec. Heck, I usually end up throwing out the OEM wheels anyway. Ship without tires if necessary, so that the wheel fits in the rim...

Max said...

That's definitely the 11% category, so somebody hit you with the rim only diameter. Mine is still sitting in customs at JFK; I suppose I may get that result as well. Pisser.

I should figure out when the categories were written. Bike wheels used to be measured in inches -- 16", 20", 24", 26", 27". The latter two would meet the lower standard and the former would not.

Assuming, as I do, that this HTS is written to favor industry based in various legislators' home states, I wonder who was from Wisconsin and Ohio at the relevant time. Those are the states that I think of as the historic hubs of US bike building.