Trade Compliance

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USTR Approves Exclusions for More Than 30 Products From Section 301 Tariffs

Posted January 08, 2019

The Office of the U.S. Trade Representative recently announced that it has granted nearly a thousand requests for exclusion from the Trump administration’s tariffs on certain imports from China which it had imposed last year as a result of its investigation into Beijing’s unfair trade practices such as the forced transfer of technology and intellectual property from U.S. companies.
Section 301 Tariff Exclusions
Drawing on the authority afforded by Section 301 of the Trade Act of 1974, the Trump administration imposed three rounds of tariffs on a total of $250 billion worth of Chinese imports. The first round or tranche of tariffs came into effect on July 6, 2018 and covered roughly $34 billion worth of goods imported under more than 800 tariff lines. The products involved were those which had been identified as benefiting from Beijing’s industrial policies, including its ambitious “Made in China 2025” program.

At the same time, the USTR provided an opportunity for importers to request exclusion of particular products from the additional 25% duty to address situations where an exemption was deemed warranted – usually where no sourcing options exist outside of China. Importers were given 90 days to file a request for product exclusion, with the application period ending on October 9, 2018. During this time, the USTR reportedly received more than 11,000 such requests.

Seeking to avoid many of the problems encountered by the U.S. Commerce Department in its handling of exclusions to the Section 232 tariffs on steel and aluminum imports, the USTR’s process allowed for trade associations to apply for duty relief on behalf of their members – the exclusions applying to products rather than just for individual companies that petitioned for them. Accordingly, the Section 301 exclusions are effective for any U.S. importer of an excluded product regardless of whether they actually filed a request.

Product exclusions for the first round of tariffs on 31 products (listed in Federal Register Notice 83-FR-67463) are retroactive to July 6, 2018, and will extend to December 28, 2019. However, owing to the ongoing federal government shutdown that began last month, CBP will not be posting any new guidance or processing refund claims (Post Summary Corrections or Protests) until “non-essential” agency staff that have been temporarily furloughed return to work.

It should also be noted that any updates to the Automated Customs Environment (ACE) will not be implemented for 10 business days after the “funding hiatus” has ended. Until these updates are complete, entry and entry summaries must therefore be submitted without the relevant Chapter 99 product exclusion number (9903.88.05) or they will be rejected. In the meantime, importers must continue paying the additional 25% duty on products falling under the exclusion list.