Scrap Metal

🗑️ Scrap Metal (Ferrous & Non-Ferrous Residues)

🌐 HS Code Reference & Customs Clearance Guide | 2026 Latest Tariff Analysis | Special Focus on US Trade Restrictions
📌 1. Product Definition: What is "Scrap Metal Residue"?

Scrap metal residues refer to the leftover waste materials generated from manufacturing, processing, or consumption of metal products. In international trade, these are not uniform. They are classified based on material composition (Ferrous/Iron/Steel vs. Non-Ferrous/Copper/Other) and form (residues, turnings, shavings).

⚠️ Key Distinction:
- Ferrous Residues: Iron or non-alloy steel waste →归入 Heading 7204.
- Copper Residues: Waste and scrap of copper →归入 Heading 7404.
- Other Residues: Waste of other base metals (Aluminum, Zinc, etc.) →归入 Heading 2620 (as a residual catch-all for metallic waste not specified elsewhere).

📌 Critical Note for US Imports:
All scrap metal residues of Chinese origin face significant Section 301 Tariffs (25%) and Section 122 Tariffs (10%), regardless of the base HS code. The Base Duty is 0%, but the Total Effective Rate is 35%.

📦 2. HS Code Classification Matrix (2026 Authorized Codes)

Based on the specific material and residue type, here are the authorized HS Codes and their rationales:

🔍 Explanation of Logic:
- 7204 Series: Covers waste of iron, steel, and ferroalloys. If the material is iron/steel, look here first.
- 7404 Series: Dedicated exclusively to waste and scrap of copper. If copper is detected, this is the correct category.
- 2620 Series: Acts as a "catch-all" for residues of other base metals (like aluminum, zinc, lead) or mixed residues that don't fit the specific ferrous/copper definitions.

💰 3. 2026 Tariff Breakdown (Detailed Tax Clause Analysis)

✅ Applicable Market: United States (US)
✅ Origin: China (CN) (Assumed based on Section 122 & 301 context in data)
✅ Effective Date: Current regulations apply.

🎯 General Tax Structure for All Listed HS Codes

📌 Detailed Tax Clause Interpretation:
1. Base Tariff (0%): Scrap metal is generally considered a raw material resource, so the standard import duty is often 0%.
2. Section 301 (25%): This is a punitive tariff imposed on goods of Chinese origin to address unfair trade practices. It applies to all HS codes listed above (7204, 7404, 2620).
3. Section 122 (10%): Additional tariff under the International Emergency Economic Powers Act (IEEPA), specifically targeting certain categories of Chinese goods, including metallic residues.
4. De Minimis Exemption: ❌ NOT APPLICABLE.
- Warning: Scrap metal does not qualify for the $800 de minimis exemption (Section 321). Every shipment, regardless of value, must go through formal customs entry (CBP Form 7501) and pay the full 35% tax.

🛠️ 4. Customs Clearance Practical Advice

✅ 1. Mandatory Documentation

✅ 2. Classification Strategy (Risk Mitigation)

🔥 Pro Tip:
"Know Your Metal!"
- If you mix copper and steel scrap in one container, you must separate them for classification purposes.
- Mixed scrap declared as "Steel" when it contains significant copper will be reclassified, fined, and possibly seized.

✅ 3. Common Mistakes & Pitfalls

❌ Mistake 1: Assuming De Minimis ($800) applies.
👉 Consequence: Goods held at border, fines issued, and 100% duty + penalties applied retroactively.

❌ Mistake 2: Vague Description ("Mixed Metal Waste").
👉 Consequence: CBP may reclassify to the highest duty code or deny entry due to lack of specificity.

❌ Mistake 3: Ignoring Section 122.
👉 Consequence: Only paying 25% (Section 301) instead of 35% (25% + 10%) results in underpayment and interest accrual.

🌍 5. Global Market Comparison

📌 Conclusion:
The US market is the most challenging due to the cumulative 35% tariff and lack of de minimis exemption. Importers must budget for this cost or explore supply chain alternatives.

📌 6. Final Checklist for Importers

1. Identify Material: Is it Iron, Copper, or Other?
2. Select HS Code: Use the matrix above (7204, 7404, or 2620).
3. Calculate Tax: CIF Value × 35%.
4. Prepare Docs: Invoice, PL, B/L, Material Cert.
5. File Entry: Formal CBP Entry (Form 7501). Do NOT use Line 83 (De Minimis).

🎯 Key Takeaway:

"Scrap Metal is Not 'Small Value' Exemption."
Every pound counts. With a 35% total tax rate, accurate classification and complete documentation are the only ways to ensure smooth clearance and avoid costly delays.

📣 Action Step:

Consult a licensed customs broker before shipping. Verify the exact material composition to lock in the correct 10-digit HS Code. Avoid ambiguity to prevent CBP audits.

✨ Accurate Classification = Cost Control & Compliance.
💼 Don't let 35% tariffs eat your margin.