Electronic Cigarettes: U.S. Imports in 2016

What GAO Found

In calendar year 2016, customs value of U.S. e-cigarette imports was about $342 million resulting in about $9 million in tariff revenue. E-cigarette devices accounted for $204 million (or almost 60 percent), e-cigarette parts for $108 million (almost 32 percent), and e-cigarette liquid for $30 million (almost 9 percent) of total customs value. Although e-cigarettes were imported from 41 countries in 2016, e-cigarette imports from China accounted for about 91 percent of these imports by customs value. In 2016, importers brought in 481,400 kilograms of e-cigarette liquid with higher nicotine content compared to 110,994 kilograms of liquid with lower nicotine content. From July through December 2016, importers brought in about 5.6 million e-cigarette devices with nicotine-containing liquid and about 5.3 million devices with nicotine-free liquid. U.S. e-cigarette imports cleared customs at 34 ports of entry; the top five ports of entry—Cleveland, Los Angeles, Savannah, Norfolk, and Seattle—accounted for 81 percent of U.S. e-cigarette imports by customs value in 2016.

Why GAO Did This Study

Over the last decade, use of electronic cigarettes, known as e-cigarettes, in the United States has grown rapidly as use of traditional cigarettes declined among both adolescents and adults. As GAO reported in May 2015, most e-cigarettes sold in the United States were thought to be imported, but e-cigarette import volume and tariff revenue were unknown because the Harmonized Tariff Schedule of the United States (HTS) did not contain separate statistical reporting numbers (also known as 10-digit HTS numbers or codes) specific to e-cigarettes. Instead, imports of e-cigarette devices, e-cigarette parts, and e-cigarette liquid were entered under HTS statistical reporting numbers that the U.S. International Trade Commission (USITC) calls basket categories, which cover a range of goods.

In the fall of 2015, the Committee for Statistical Annotation of Tariff Schedules—comprising representatives from USITC, U.S. Customs and Border Protection (CBP), and the U.S. Census Bureau (Census)—established six new statistical reporting numbers for e-cigarette devices, parts, and liquid in the HTS, which went into effect on January 1, 2016.

U.S. import data are collected by CBP from records submitted by importers. These data are then incorporated into the official trade statistics published by Census. GAO analyzed import data for the new statistical reporting numbers for e-cigarettes for calendar year 2016, the first year such data were collected by the U.S. government. GAO used 2016 data that were available in February 2017 from the public Interactive Tariff and Trade DataWeb database maintained by USITC, which incorporates U.S. trade statistics published by Census. GAO assessed the reliability of the data by reviewing agency documents about U.S. foreign trade statistics and interviewing cognizant agency officials. GAO determined that the 2016 data on U.S. e-cigarette imports that were available in February 2017 were sufficiently reliable for the purposes of presenting annual descriptive statistics.