90,000 Hondas Face U.S. Duty

The U.S. Customs Service on Monday proposed levying a 2.5% duty on about 90,000 Canadian-made Honda Civics, saying the cars lacked sufficient North American content to qualify for duty-free status.

Honda Motor Co. said it will appeal the ruling, which could cost the Japanese auto maker about $16.5 million.

A Customs Service audit completed last week found that the Civics did not meet the 50% North American content threshold set by the U.S.-Canada free trade agreement.

Customs officials declined to say what level of North American content the cars were found to have, but Honda spokesman Scott Whitlock said it was 46%. Honda considers about 69% of the components North American in origin, he said.

The vehicles were assembled at the company’s plant in Alliston, Ontario, and shipped to the United States between Jan. 1, 1989, and March 31, 1990.