Recently we’ve noticed an uptick in the number of Canada Border Services Agency (“CBSA”) audits regarding the tariff classification of gloves (see our prior blog).  With its mid-year update, the CBSA has officially upgraded this focus to a Trade Compliance Verification Priority!

This marks the third time gloves have been a “verification priority” having previously been in the spotlight in 2017 and 2019.  The results from the first two rounds revealed that 82% of the 49 companies targeted were non-compliant, resulting in reclassification duties and penalties totalling over $2.6 million.

Clearly, the misclassification of gloves by importers remains a significant concern for the agency!

The Targeted Goods

The CBSA identified a risk of imported gloves being incorrectly classified under Headings 39.26 and 42.03 of the Customs Tariff (subject to duties of 0% to 15.5%), instead of Chapters 61 and 62 (subject to duties of 18%).

Because of the wide variety of gloves, importers of any of the following may expect to hear from a CBSA Auditor in the next year: 

• Gloves made of certain plastics, employed in clean rooms with certain limits of air contamination;
• Gloves used in noxious atmospheres;
• Gloves made of leather or composition (not imitation) leather;
• Gloves, mittens, and mitts which are knitted or crocheted;
• Gloves impregnated, coated, covered, or laminated with plastics or rubber (e.g., gardening gloves);
• Medical gloves; and
• Gloves used in sports (e.g., hockey gloves).

Why Do I Care?

The proper tariff classification of a good impacts the rate of duty.  Determining the proper tariff classification of gloves can be particularly complicated as some gloves are classified according to their end-use, while others are classified according to their composition.  CBSA even has a Memorandum on the topic!

Additionally, the Canadian International Trade Tribunal (“CITT”) has two previous cases dealing with the tariff classification of gloves (Igloo Vikski Inc. and Sher-wood Hockey Inc.), and Canada v. Igloo Vikski Inc. was even appealed all the way to the Supreme Court of Canada(!), where it was used to help clarify certain principles of glove classification in the context of hockey gloves (which could not be classified as “articles of plastics” under Heading 39.26, despite having some plastic components). 

With the surge of imported medical nitrile gloves that Canada saw during the COVID-19 pandemic, many importers of these goods could find a CBSA Officer reaching out to them to talk tariff classification.  Generally, the CBSA has up to four years to re-determine the tariff classification of imported goods.

Takeaways

Importers of gloves should consider having experienced legal personnel review their tariff classifications for potential corrections.

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