**Subject: Request to Exclude First Generation Wheel Bearings from Section 301 Tariffs**

Angular contact Balls/Tapered Roller bearing, double row

HTSUS: 8482105024

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. Schaeffler Group USA, Inc. (“Schaeffler”) respectfully submits these comments in support of its requested exclusion for certain types of automotive first-generation bearings (“bearings”). As a leading innovator in designing and manufacturing automotive components, Schaeffler sympathizes with the administration’s concerns relating to China’s acts, policies, and practices investigated by your office and more fully described in your report published on March 22, 2018. However, a 25% tariff on these bearings would not address these concerns and objectives. 

These bearings 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. Their importation does, however, support U.S. jobs and investment in the expansion of Schaeffler’s domestic operations. 

I. **Introduction**

These bearings are purchased on the automotive aftermarket by owners of used cars as spare parts meant to replace aging components. The segmented nature of the automotive parts industry means that these aftermarket products must be sourced from trusted manufacturing facilities that are capable of supplying our modest volume requirements at affordable prices. 

II. **Description of the product**

These particular bearings fall under the 10-digit HTSUS subheading 8482.10.5024, “wheel hub angular contact ball bearings, other than flanged.” This subheading is confirmed by a U.S. Customs and Border Protection Ruling NY 891130, issued on October 28, 1993, which analyzed “the tariff classification of wheel bearing kits from Germany, Italy, Brazil, Mexico and Sweden.” Proposed tariff language would describe these products as “First generation wheel bearings of a diameter between 50 and 100 millimeters,”

These bearings have a diameter that ranges 50 millimeters to 100 millimeters across, but they are otherwise structurally identical. The bearings are used almost exclusively on wheel axels in passenger cars and are made almost entirely out of steel.

Each bearing is one singular unit comprised of an outer ring-casing which houses two inner rings, rolling elements, and a cage. From the outside, the inner rolling elements and cage are not visible. The outer ring forms the cylindrical “shell” of the bearing, and is polished silver in its appearance. Inside the outer ring is a black or red seal made of an elastomer. These seals are also circular, and appear on either side of the bearing. Inside the seal is another steel ring, which is polished silver in appearance like the outer ring. 

These inner steel rings are also on either side of the bearing. The entire configuration of rings leaves a cylindrical hole in the center, much like a donut. An observer will be able to notice that the two inner rings are separated in the center of the bearing by a small gap. More information that would assist Customs in identifying these products is provided in Annex A, attached alongside this request.

These bearings are easily identifiable from other similar products under the same HTSUS subheading, and as such this exclusion should be easily administrable. 

III. **The bearings are not relevant to the “Made in China 2025” policy or China’s other industrial goals**

The first generation wheel bearings are exclusively designed for older model vehicles manufactured by non-Chinese automobile companies. First generation wheel bearings are one of the oldest and most mature bearing technologies on the market. Because of their limited use and the universality of their design, these bearings are not of any strategic consequence to China’s industrial growth or innovation strategies.

These wheel bearings are not related to "Made in China 2025" or other Chinese industrial programs. Based on our understanding - those programs are related to high-technology, robotics, aerospace, ocean engineering/shipping, railway, electric vehicle, utility/power transmission, medical devices, or agricultural machinery.

These bearings are low-technology automotive components and are not relevant to any strategic program defined by the Chinese government. China has already mastered producing these bearings at large scales, and has done so for years.

In fact, these bearings are so low-tech that the automotive industry is moving to more complex bearings for newer car models. These newer models require bearings that are more technologically advanced in terms of their design, function, and operation. 

Because these first-generation bearings are used in non-Chinese, older vehicles, their development is contrary to China’s industrial policy. The manufacture of these bearings supports continued operation of old-vehicles, which necessarily reduces demand for any new automotive technology designed and created in China. Hence, the production of these bearings is antithetical to China’s industrial goals aimed at developing new vehicles.

Moreover, the design and production of these products is not the result of any malign “acts, policies, or practices” related to intellectual property rights, forced technology transfer, or innovation in China. 

IV. **These bearings cannot be sourced from anywhere but China**

The facilities required to manufacture these bearings must be validated and be equipped with the correct tooling and machines. There is no third-country capable of meeting these testing and tooling needs with respect to the manufacture of bearings.

V. **Imposition of a 25% tariff would result in severe economic harm**

Schaeffler operates numerous facilities throughout the United States.

In addition, high prices for repairs and repair parts would negatively impact the livelihood of down-stream jobs supported by auto parts. Installers, repair technicians, and shop owners alike would see a reduced usage of their services, threatening their livelihoods as well. 

These lost jobs would be felt in addition to the higher prices paid for by consumers as a result of decreased competition and increased prices. 

VI. **Annual values for first generation wheel bearings**

As required in the exclusion Request procedures, the chart below shows the figures of these first generation wheel bearings as imported into the United States.

This submission contains business confidential information (“BCI”) for which Schaeffler requests confidential treatment. Pursuant to the USTR’s published procedures for Exclusion Requests, Schaeffler has identified BCI in brackets and has appropriately stamped each page containing business confidential information. A public version of this Request is provided simultaneously with Schaeffler’s BCI version. Schaeffler certifies that disclosure of its BCI would endanger trade secrets or profitability, and that the information would not be customarily released to the public. The submitter further 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 us.****

**Attachment 1: Identification of Product for Exclusion**

**Wheel bearing 1st. Generation**

These particular bearings fall under the 10-digit HTSUS subheading 8482.10.5024, “wheel hub angular contact ball bearings, other than flanged.” This subheading is confirmed by a U.S. Customs and Border Protection Ruling NY 891130, issued on October 28, 1993, which analyzed “the tariff classification of wheel bearing kits from Germany, Italy, Brazil, Mexico and Sweden.” 

These particular bearings fall under the 10-digit HTSUS subheading 8482.10.5024, “wheel hub angular contact ball bearings, other than flanged.” This subheading is confirmed by a U.S. Customs and Border Protection Ruling NY 891130, issued on October 28, 1993, which analyzed “the tariff classification of wheel bearing kits from Germany, Italy, Brazil, Mexico and Sweden.”

These bearings have a diameter that ranges 50 millimeters to 100 millimeters across, but they are otherwise structurally identical. The bearings are used almost exclusively on wheel axels in passenger cars and are made almost entirely out of steel.

Each bearing is one singular unit comprised of an outer ring-casing which houses two inner rings, rolling elements, and a cage. From the outside, the inner rolling elements and cage are not visible. The outer ring forms the cylindrical “shell” of the bearing, and is polished silver in its appearance. Inside the outer ring is a black or red seal made of an elastomer. These seals are also circular, and appear on either side of the bearing. Inside the seal is another steel ring, which is polished silver in appearance like the outer ring. 

These inner steel rings are also on either side of the bearing. The entire configuration of rings leaves a cylindrical hole in the center, much like a donut. An observer will be able to notice that the two inner rings are separated in the center of the bearing by a small gap. More information that would assist Customs in identifying these products is provided in Annex A, attached alongside this request.

These bearings are easily identifiable from other similar products under the same HTSUS subheading, and as such this exclusion should be easily administrable. 

Angular contact Balls/Tapered Roller bearing, double row

HTSUS: 8482105024

Double row bearings correspond in their structure to a pair of single row angular contact balls or tapered rollers bearings in an “O” arrangement, but they are narrower to a certain extent. They differ in the size of the contact angle and the design of the bearing rings. They are produced as open bearings and also with sealing washers or sealing shields.

In design terms, Gen 1 bearings thus fulfil the requirements for:

· supporting axial loads in both directions and high radial loads

· low-noise running

· versatile application, OD sizes from 50 mm to 100 mm

This type of bearing is used almost exclusively in passenger cars. These “compact bearings” comprise an undivided outer ring, two inner rings, rolling elements, and a cage, and are pre-lubricated, sealed, and maintenance-free.

**Properties:**

· Double-row angular contact balls or Tapered Roller bearings

· Compact unit, cannot be disassembled

· 1 bearing outer ring

· 2 bearing inner rings

· Pre-greased and maintenance-free

· Sealed

· Preset bearing clearance

· With and without multipole encoder

· With and without snap ring to secure on axle carrier

· Used on front and rear axle

**Materials:**

Inner and Outer rings: Made with steel, the most common material 100Cr6 and GCr15

Balls / Roller: Made with 100Cr6 and GCr15

Cage: Standard cages designs for Gen 1 bearings are made from brass, polyamide PA66+GF25 or steel

Seal: Lip seals are seals with one or more seal lips that give axial or radial sealing. These seals are predominantly elastomer seals (SPCC and NBR). Nowadays these kinds of bearings are manufactured with a multipole encoder for vehicles with ABS. Rotational speed signals are being increasingly transmitted by wheel bearings. A multipole encoder is often integrated into the seal for this purpose. The rotational speed signal is recorded via corresponding sensors, and used by the various control devices.

CONTAINS BUSINESS CONFIDENTIAL INFORMATION

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