Reference no: EM131662645

Question: Case Problem with Sample Answer. DaimlerChrysler Corp. makes and markets motor vehicles. DaimlerChrysler assembled the 1993 and 1994 model years of its trucks at plants in Mexico. Assembly involved sheet metal components sent from the United States. DaimlerChrysler subjected some of the parts to a complicated treatment process, which included applying coats of paint to prevent corrosion, impart color, and protect the finish. Under U.S. law, goods that are assembled abroad using U.S.-made parts can be imported tariff free.

A U.S. statute provides that painting is "incidental" to assembly and does not affect the status of the goods. A U.S. regulation, however, states that "painting primarily intended to enhance the appearance of an article or to impart distinctive features or characteristics" is not incidental. The U.S. Customs Service levied a tariff on the trucks. DaimlerChrysler filed a suit in the U.S. Court of International Trade, challenging the levy. Should the court rule in DaimlerChrysler's favor? Why or why not?