Trade Court Refuses Reliquidation at Higher Duty Rate in Classification Case for Electric Cables

Importers that challenge a protest denial in court do not thereby subject themselves to the risk of paying higher duties, according to an April 23, 2026, opinion by Judge Claire R. Kelly of the U.S. Court of International Trade (CIT). In Cyber Power Systems (USA) Inc. v. United States, a suit addressing the tariff classification of, and assessment of Section 301 duties on, certain imported Chinese electric power cables, Judge Kelly held in the government's favor that the cables are not for telecommunications use, but also held that U.S. Customs and Border Protection (CBP) cannot collect additional duties as a result of that judgment where the classification was not made through liquidation.

As we have advised, the U.S. Trade Representative (USTR), under the first Trump Administration, imposed additional duties on four lists of certain Chinese-origin goods under Section 301 of the Trade Act of 1974, 19 U.S.C. § 2411, which permits tariffs to counter the effects of unfair trade practices, in response to China's technology transfer, intellectual property, and innovation policies. So-called "List 3," codified in part under subheading 9903.88.03 of the Harmonized Tariff Schedule of the United States (HTS), imposes additional duties of 10% beginning September 24, 2018, and 25% beginning May 10, 2019, on Chinese goods classified under nearly 5,800 tariff codes, including 8544.42.20 and 8544.42.90. Both of those provisions cover other insulated electric conductors for a voltage not exceeding 1000 V fitted with other connectors, which generally are subject to 2.6% duty under the residual 8544.42.90; but if the conductor is "of a kind used for telecommunications," it is classified duty-free under 8544.42.20. However, at all relevant times, 9903.88.33 provided an exclusion from List 3 duties for products classified under 8544.42.2000 "each valued over $0.35 but not over $2."

Cyber Power and CBP agreed until after liquidation that the subject cables are properly classified under HTS 8544.42.2000 as telecommunications cables but disagreed on the application of Section 301 duties. Cyber Power also entered the Chinese cables under 9903.88.33, but CBP liquidated them under 9903.88.03, claiming additional duties were owed. In denying Cyber Power's protest on the Chapter 99 classification, however, CBP stated that the cables did not actually meet the HTS definition of telecommunications cables and instead should be classified under 8544.42.9090 at the higher duty rate, but never reliquidated the cables accordingly. Cyber Power filed suit under 28 U.S.C. § 1581(a), after which the government asserted its position in a counterclaim. In a previous opinion, the CIT "redenominated" the counterclaim as a defense under Rule 8(d)(2), finding no explicit or implied statutory cause of action for the Government to raise a counterclaim even though the protest "suspended the finality of liquidation for all parties." The case was presented to the court on cross-motions for summary judgment.

First, the CIT held that the cables are not of a kind used for telecommunications, and therefore are properly classified under HTS 8544.42.90 and 9903.88.03, and not 8544.42.20 as they were liquidated. After agreeing with the parties that subheading 8544.42 is proper, the court turned to the meaning of "telecommunications" to determine the eight-digit level. It relied on the Oxford English Dictionary to define "telecommunications" as "the conveyance of information over a distance by means of electromagnetic mechanisms" and cited the Explanatory Notes to determine that the "species of cable" covered by the language of 8544.42.20 "includes only those cables that have a principal use of conveying messages over a distance by transmitting a signal." Here, the court explained, the parties agreed that the principal (and only) use of the subject cables is "to facilitate the transmission of power," sometimes through a signal, by connecting a battery backup unit to an optical network terminal. While transmission of a signal is a telecommunications function and the cables were used in the telecommunications industry, the court said that 8544.42.20, "as a use provision, does not extend to any cable that may transmit a signal." Therefore, HTS 8544.42.90 (and 9903.88.03) was the proper classification.

Second, Judge Kelly held that the CIT, in the absence of a valid counterclaim, did not have the authority to order the importer to pay the additional duty imposed under HTS 8544.42.90. The court explained that importers and CBP both have the statutory opportunity to challenge or correct improper classifications, which unless action is taken ends for CBP after the 90-day voluntary reliquidation period of 19 U.S.C. § 1501 and for the importer after the 180-day protest period of § 1514. Despite the court's de novo review of classification questions and its obligation under Jarvis Clark Co. v. United States to reach the correct classification result whether raised by the parties or not, which the court explained was to promote the "uniform and consistent interpretation and application of the customs laws," the court held that it had no authority to order reliquidation according to CBP's newly asserted classification. Therefore, CBP could "not collect any additional duties which would have been due had CBP entered or reliquidated [the entries] under the proper subheading." In other words, a protest, said the court, suspends the finality of liquidation for the benefit of the importer alone, not of CBP.

While the classification decision will impact cable importers and suggests a duty benefit to expanding the use of imported cables to the transmission of information in addition to power, it is the reliquidation decision that will redound to all importers if it is upheld after any future appeal. According to Cyber Power, an importer can have certainty as to the maximum amount of duties it will owe on an entry once 90 days since liquidation has passed, and it need not hesitate to file a protest for that reason.

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Burt Braverman is a partner and Russell Semmel is an attorney in the international trade, investment & national security group in the Washington, D.C. office of DWT. If you have any questions or need assistance, please contact the authors or another member of our international trade, investment & national security team. Our team can assist importers in the telecommunications and energy industries in determining the proper tariff classifications for their products and challenging unfavorable CBP decisions. To stay informed, sign up for our alerts.