The first set of Section 301 tariffs went into effect on July 6, 2018. Although the originally-proposed list of 1,333 tariff subheadings was culled to 818, the Trade Representative acknowledged that the final list included products were covered by claims “that specific products within a particular tariff subheading were only available from China, that imposition of additional duties on the specific products would cause severe economic harm to a U.S. interest, and that the specific products were not strategically important or related to the ‘Made in China 2025’ program.”
Exclusion Requests Are Due by October 9, 2018
To mitigate these seemingly unintended consequences, USTR has established a process whereby “interested parties” may seek exclusion of specific products within a covered HTS subheading. Exclusion requests must provide the following information:
- Identification of the particular product in terms of the physical characteristics (e.g., dimensions, material composition, or other characteristics) that distinguish it from other products within the covered 8-digit subheading. USTR will not consider requests that identify the product at issue in terms of the identity of the producer, importer, ultimate consumer, actual use or chief use, or trademarks or tradenames. USTR will not consider requests that identify the product using criteria that cannot be made available to the public.
- The 10 digit subheading of the HTSUS applicable to the particular product requested for exclusion.
Requesters also may submit information on the ability of U.S. Customs and Border Protection to administer the exclusion
- The annual quantity and value of the Chinese-origin product that the requester purchased in each of the last three years.
- Whether the particular product is available only from China. In addressing this factor, requesters should address specifically whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries.
- Whether the imposition of additional duties on the particular product would cause severe economic harm to the requester or other U.S. interests.
- Whether the particular product is strategically important or related to “Made in China 2025” or other Chinese industrial programs.
The deadline for exclusion requests is October 9, 2018. Responses in support or opposition are due within 14 days afterward, and replies 7 days after that. USTR will provide a request form that submitters may use.
Successful exclusion requests will be retroactive to July 6, meaning that additional duties deposited with Customs and Border Protection on or after that date will be refunded. Exclusion decisions are to be published in the Federal Register, and shall remain in effect for one year after the publication date. USTR did not address whether there will be a process for extending exclusions beyond that time, in the event the Section 301 duties remain in effect.
But Wait, There’s More
Not to be outdone, China has imposed its own retaliatory duties on designated imported U.S.-origin products. The Trump administration has decided to up the ante significantly in response, announcing a plan to extend the 10 percent tariff to an additional $200 billion in Chinese imports.
We all know the drill by now: numerous 8-digit Harmonized Tariff Schedule subheadings are proposed for coverage by USTR, and potentially affected parties are given the opportunity to comment on whether they should be in or out. Here’s the schedule for round three.
July 27, 2018: Due date for filing requests to appear and a summary of expected testimony at the public hearing, and for filing pre-hearing submissions.
August 17, 2018: Due date for submission of written comments.
August 20-23, 2018: Public hearing.
August 30, 2018: Due date for submission of post-hearing rebuttal comments.
Importers of items covered by these additional HTS subheadings should consider participating in the process. As the first round of product identifications demonstrated, USTR is receptive to well-founded arguments as to why specific subheadings should be excluded; indeed, the odds are better than playing Powerball and the stakes much higher.