Dear Ambassador Lighthizer, 

Thank you for the opportunity to request an exclusion for products of Chinese origin from the 

tariffs imposed under Section 301 of the Trade Act of 1974. DMac Industries, Inc. (“DMac”) 

respectfully submits these comments in support of its requested exclusion for certain types of 

belt-driven compressor units used in automotive air conditioning systems (generally referred to 

in this request as “compressors”). DMac understands and shares the administration’s concerns 

and competitive objectives relating to China’s acts, policies, and practices investigated by your 

office and more fully described in your report published on March 22, 20181. In spite of this, a 

25% tariff on compressors would not address these concerns and objectives. [***] 

These belt-driven compressors are made in China, but are not relevant to what we understand to 

be the target of the Section 301 tariffs—China’s acts, policies, and practices with respect to 

intellectual property and its “Made in China 2025” initiative. In fact, the importation of these 

compressors in the United States benefits U.S. interests by supporting our customers, our 

operations, and our continued investment in providing high-quality jobs and innovation in 

creating efficient supply chains that is vital to the overall competitiveness of the U.S. automotive 

market. 

I. Background information 

DMac is a full-service, Tier 1 automotive supplier that specializes in new and remanufactured 

automotive components, sales and marketing, vehicle integration and program management. The 

company was founded in 2004 and is based in Livonia, Michigan. Our company specializes in 

designing and reverse-engineering auto components, assisting customers in every step of the 

manufacturing process from cradle to grave. One of our main product lines and areas of expertise 

concerns motor vehicle compressors. 

The compressor is responsible for assisting in the circulation and pressurization of refrigerant in 

the air conditioning system of automobiles. The core technology and principles that go into 

manufacturing compressors has existed since the 18th century.2 As such, these components are 

ubiquitous and well-established in terms of their international design and production. DMac 

imports non-OEM versions of these compressors from its affiliated manufacturers in China, 

which are the subject of this request. 

[***] 

II. Identification of the Particular Product for Exclusion

1 See Findings of the Investigation Into China’s Acts, Policies, and Practices Related to Technology Transfer, 

Intellectual Property, and Innovation Under Section 301 of the Trade Act of 1974, Office of the United States Trade 

Representative, March 22, 2018. (as used in this request, the “Findings”). 

2 See e.g., “Reciprocating Compressors Past, Present, and Future,” Dr. John P. Elson, Purdue Engineering, 

https://engineering.purdue.edu/Herrick/conferences/about/ReciprocatingCompressors%20-%20Jack%20Elson.pdf
A. Applicable Tariff Code and Suggested Language

The types of compressors we seek to exclude are distinct in their appearance from other 

compressors contained under the HTSUS Code 8414.30.80. Generally, this 8-digit classification 

encompasses compressors used in forms of refrigerating equipment. The automotive 

compressors that are the basis of this request can be readily identified from other products under 

this Code based on their unique and shared characteristics which identify them as “belt driven 

compressors.” 

In particular, automotive compressors fall under the category specific 10-digit HTSUS Code 

8414.30.8030 (“Compressors, refrigerating and air-conditioning, for motor vehicles.”). This 

classification is confirmed in a 2007 Customs ruling on similar refurbished compressors, 

numbered N012238 (“The tariff classification, marking and country of origin of refurbished 

compressors from Mexico.”) 

This classification, on its own, is likely sufficient tariff language to identify the products as 

imported. In response to the USTR’s request for specific tariff language to describe the product, 

we suggest a potential wording may be: “Belt-driven compressors of a type used in refrigerating 

and air-conditioning equipment for motor vehicles.” 

B. Physical Description of the Product

The belt-driven compressor that is the subject of this request is one complete, assembled item 

that measures approximately 6 inches in diameter 230mm and 270mm in length, and 78mm to 

82mm in diameter. While it is a single unit, it can be broken down into easily identifiable, 

constituent elements similar to an insect or a layer cake. 

On one end of the belt-driven compressor is a clutch plate, which is a flat, metal disc having a 

center hole for a bolt surrounded by additional holes arranged in a triangular pattern. This clutch 

plate is directly affixed to the pulley assembly, which is a rotating cylindrical disc with a 

diameter between 130mm and 160mm. The pulley assembly has an outward appearance 

exhibiting multiple grooves for purposes of attaching a belt from the engine block for power. 

This pulley assembly is painted black. 

Affixed to the pulley assembly is the compressor body, which is silver metallic in color and 

made up of steel. This compressor body can range from 120mm to 200mm in length. The 

compressor body is a roughly cylindrical piece molded with mounting arms or bracket pieces 

protruding on the bottom and top. The bracket pieces have holes through them to allow bolts to 

pass through. There are four bracket pieces on top, and four bracket pieces on bottom. 

Attached to the back of the compressor body is a rectangular steel piece. On the top of this 

rectangular piece are two jutting metal pieces that each have a hole in them for attaching a tube. 

These pieces are all molded onto the steel body., which are molded into the steel body. Finally, 
there is an electrical wire protruding from the clutch assembly, which ends in a black plastic 

connector. 

These products can be easily distinguished from electric-only compressors, as those compressors 

do not have the rotating cylindrical pulley assembly as described above. Other compressors that 

are imported under the same 8-digit tariff heading are either outside of the dimensions described 

above and/or do not have a rotating cylindrical pulley assembly. 

These compressors are shipped in boxes that measure 8 inches high, 8 inches wide, and 11 inches 

deep. The boxes say “Compressor” in black lettering on the side. They are palletized and packed 

in overseas shipping containers, which number approximately 2,760 compressors per container. 

The information in Attachment A provides additional detail that would assist the USTR and U.S. 

Customs and Border Protection (“USCBP”) in identifying and administering the exclusion of 

these products. Based on these descriptions and characteristics, we believe USCBP will be able 

to administer this exclusion request. 

III. Annual Value and Quantity of Product

Year Quantity Value 

2015 [***] [***] 

2016 [***] [***] 

2017 [***] [***] 

IV. Rationale for Exclusion

A. These compressors are not strategically important or related to “Made in 

China 2025” or other Chinese industrial programs

Compressors are extremely low-tech and low-value components that do not present a strategic 

opportunity for China to exploit in its industrial policy. Compressors are not important in this 

regard for a few reasons: 

1. The design and production chains for these products is mature and does not present a 

high-tech or high-value target for China’s manufacturing sector. In fact, the design and 

manufacture of compressors has remained relatively unchanged since China began 

manufacturing them in the mid-1980s. The low-value of these components means they 

are negligible in the scheme of China’s broader industrial objectives as they relate to the 

automotive parts industry. The production of compressors relies heavily on laborintensive assembly. 
2. These products were not selected in China’s market access rues issued in 2009 by the 

Chinese Ministry of Industry and Information Technology, which prioritized the key 

automotive technologies as batteries, drive systems, and control systems.3

3. Not only this, the compressors we import are for used vehicles and thus represent 

already developed technology that is not beneficial to China’s aim of growing its 

indigenous new-vehicle production capacity. 

In addition to the above, we appreciate that the “Made in China 2025” policy focuses primarily 

on these high-tech and evolving industries: (1) steel and nonferrous metals, (2) construction 

materials, (3) rail equipment, (4) power generation and infrastructure, (5) resource development, 

(6) textiles, (7) new energy vehicles, (8) information technology, (9) machinery, (10) aviation, 

and (11) shipbuilding. In contrast, these compressors are low tech, unchanging, and are not 

related to the growth of these industries. 

As far as the automotive industry is concerned, the Made in China 2025 initiative prioritizes the 

development of next-gen vehicles, including “new energy vehicles” (“NEV”) capable of being 

manufactured as a Chinese brand. While compressors are used in vehicles, an additional tariff 

will not affect China’s expansion in this sector. In fact, a tariff on compressors may undermine 

the Section 301 action’s objectives. 

Given China’s long-standing expertise and ability in producing compressors, there is no “supply 

chain gap” to close, which the Findings suggest is one of the driving forces behind China’s 

automotive policies.4 These compressors exist for the purposes of servicing existing vehicles, 

relying on designs and supply chains that have existed for over 30 years. Similarly, the maturity 

of these products means there is no platform from which their production may spur nextgeneration research and development. 

This lack of utility is due to the fact these compressors rely on belt-driven technology for 

conventional vehicles, as opposed to the electrically powered compressors which would be used 

in NEVs.5 As it stands, these belt-driven compressors are technologically inferior to, and 

antithetical to the development of, energy-efficient technologies identified as key industrial 

objectives by the Chinese government.6

Indeed, these compressors are parts designed to prolong the longevity of vehicles which were 

manufactured outside of China. To the extent the production of these compressors affects the 

3 Findings, page 31. 

4 Findings, page 139. 

5

 In fact, the existence of the belt on the compressors under the scope of this request is one of the features that allows 

it to be distinguished from other similar products. 

6 See A A Zulkifli et al 2015 IOP Conf. Ser.: Mater. Sci. Eng. 100 012028, “Impact of electric compressor for 

automotive air conditioning system on fuel consumption and performance analysis.” (finding that conventional beltdriven compressors are an order of magnitude less efficient than newer electric compressors). 
Chinese market, they are likely to detract from investment in new vehicle production. The 

existence of affordable automotive parts makes the purchase of new vehicles less attractive by 

extending the time a used car continues to run. The longer a consumer uses their car, the less 

demand there is for a new one. Not only this, U.S. demand for Chinese compressors keeps 

Chinese production focused on supplying foreign consumers. Any reduction in demand brought 

about by increased costs may result in China’s compressor industry shifting away from servicing 

foreign clients and toward the industrial goals set by the Chinese government. 

Finally, the technology behind these compressors has not benefited from any nefarious acts, 

policies, or practices of the Chinese government or industry writ large. Their production does not 

rely on the cooption of any sensitive intellectual property, nor has our company been required to 

embark on any joint-venture or information-sharing scheme in order to gain access to the 

Chinese market. Put simply, the acts, policies, and practices as described in the Findings are not 

applicable to the compressors. 

B. Increased tariffs on these compressors would result in significant harm to 

DMac’s business and U.S. economic interests 

[***] 

There is also a real ripple effect on other industries reliant on affordable compressors from 

China. The integrated nature of our supply chain means the cost of the product is passed on 

through to master distributors, warehouse distributors, retailers, repair shops, and then to the 

consumer at exacerbated prices. Given the increased cost arising from the tariff, each link in this 

supply chain will be forced to lower employment and/or wages to maintain profitability. 

This risk is especially acute in the case of compressors, which are not “necessary” components 

for consumers seeking to keep their vehicle in operation. The price elasticity of demand theorem 

proves that these higher prices ultimately result in fewer compressors sold. Every compressor left 

unpurchased also means the corresponding labor to install them goes unneeded as well. Hence, 

increased tariffs on compressors will have a direct effect on employment for well-paying jobs in 

the automotive repair industry, in addition to lost profits for owners of repair shops. 

[***] 

C. The compressors are available only from China

China originally began producing compressors in the mid-1980s. Since then, the country has 

become one of the leading producers of compressors. The emergence of China as a supplier of 

compressors came at a time when production in the United States was in decline. In fact, only a 

few of the compressor models we offer were ever manufactured in the United States. Production 

of these models moved to China nearly 20 years ago. The nature of the automotive parts market 

means companies like ours are prohibited from acquiring the high-quality compressors we 
require from other manufacturers. As it stands, DMac cannot supply its compressors from any 

other country, including the United States. 

The compressor industry has evolved to a point where China is the only feasible supplier of 

compressors that can be purchased at the volumes required for our business. A select few of the 

compressor types we sell are made in the United States. However, these compressors are 

manufactured by original equipment manufacturers (“OEM”) that maintain their own exclusive 

supply chains that we cannot access. Moreover, the cost of producing these components is so low 

that it is not economically feasible to produce them outside of China. 

There are some third countries which produce certain types of compressors, but the products that 

are the subject of this request cannot be sourced from these countries for a variety of reasons. 

First, compressors manufactured outside of China do not meet the rigorous safety and technical 

standards required by us, and our customers, for automotive use. This is an unavoidable 

requirement of our business. 

Second, we have invested significant capital outlays, time, and experience over the course of 20 

years to source these products from China. These efforts cannot be duplicated, and the inability 

to shift production is compounded by the fact the tariffs are costing us money we may otherwise 

be able to invest due to the increased tariffs. 

Third, no other country has the workforce capacity to come close to meeting our demand. 

Similar to the U.S. compressor market, we are unable to avail ourselves of comparable original 

equipment manufactured outside of China based on the fact these distribution networks are 

permanently captured by the manufacturer. 

Fourth, the tariffs create an uncertain macroeconomic environment that is not conducive to 

investment. The nature of these tariffs creates significant investment risk that deters companies 

from investing in a manufacturing facility, in the United States or elsewhere, capable of 

producing these products. 

V. Conclusion

[***] In spite of this, the additional 301 tariffs would not serve the administration’s underlying 

purposes with regard to combatting China’s acts, policies, practices, or Made in China 2025 

policy as identified in the USTR’s Findings. For the reasons stated in this petition, DMac 

requests that the USTR exclude certain automotive compressors under HTS subheading 

8414.30.8030 from the list of goods subject to the Section 301 tariffs. 

This submission is a public version of a document otherwise containing business confidential 

information (“BCI”). Pursuant to the USTR’s published procedures for Exclusion Requests, 

DMac has identified BCI in brackets. The undersigned certifies that the information provided 

herein is complete and correct to the best of his knowledge.We would be happy to work with the 
USTR to answer any questions or provide any additional information. Should you require 

anything, please do not hesitate to contact me. 

Sincerely, 

_______________________ 

Rich Carrell 

President, DMac Industries, Inc. 
Attachment A