The Office of the U.S. Trade Representative issued a new set of product exclusions from the fourth group of Section 301 tariffs on goods from China. The new exclusions from the tariffs include "one existing ten-digit HTSUS subheading and 9 specially prepared product descriptions, which together respond to 25 separate exclusion requests," according to the notice. The product exclusions apply retroactively to Sept. 1, 2019, the date the fourth set of tariffs took effect. The exclusions will be in effect until Sept. 1, 2020.
Section 301 tariff exclusions
The Office of the U.S. Trade Representative has established an exclusion process for Section 301 tariffs on China. In a series of rounds since the tariffs took effect, importers have been able to request exclusions from the tariffs, as well as extensions to existing exclusions. Many exclusions have been allowed to expire, as well. Section 301 exclusions are applicable to all importers of a given good, which may be defined as an entire tariff schedule subheading or a subset of a subheading outlined in a written description.
Most exclusions from list three Section 301 China tariffs are now set to expire Aug. 7, after the Office of the U.S. Trade Representative declined to include them in a notice of extensions released the day before their slated expiration. In the notice, USTR granted extensions until Dec. 31 to only 266 of the nearly 1,000 list three exclusions published to date. That leaves over 700 exclusions to expire on schedule.
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The Office of the U.S. Trade Representative is requesting comments on whether exclusions to tariffs on Chinese imports on Section 301 List 1 should be extended beyond Oct. 2, it said in an Aug. 3 notice. Comments are due by Aug. 30, it said. The evaluation's focus will be on whether, despite the first imposition of these additional duties, the particular product remains available only from China. The companies are required to post a public rationale.
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The Office of the U.S. Trade Representative will grant extensions to 14 exclusions from the second list of Section 301 tariffs on goods from China that were due to expire July 31, it said in a notice. The 55 exclusions that weren't extended, all listed in U.S. Note 20(o) to subchapter III of chapter 99 and filed under subheading 9903.88.12, will expire July 31. The 14 extended exclusions will now expire Dec. 31, USTR said.
A “key thing” about the Trade Act Section 301 tariff exclusions on Chinese goods that have been granted or extended is that most are set to expire Dec. 31, Nicole Bivens Collinson, president-international trade and government relations with Sandler Travis, said during a Sports & Fitness Industry Association webinar July 23. If President Donald Trump is reelected, she believes, his administration “will view that as a mandate” for eradicating tariff exclusions permanently, she said.
The $38 million in Section 301 tariff costs iRobot incurred in 2019 inflicted a hit of three percentage points on its gross margin for the year, CEO Colin Angle said. IRobot assumes the List 3 tariff exclusion it landed in April on the robotic vacuum cleaners it sources from China will expire at the end of 2020, he said. The reinstatement of 25% tariffs on Chinese goods will result in a “similar contraction” to 2021 gross margin, he said. U.S. Trade Representative Robert Lighthizer “made it quite explicit” in congressional testimony last month that any granted List 3 exemptions “would expire at the end of the year,” Angle said. Lighthizer’s testimony “is the most explicit guidance that we have been given,” he said July 22 following quarterly results.
Rep. Kevin Brady, R-Texas, the ranking member on the Ways and Means Committee, said that incentives to move medicines, active pharmaceutical ingredients and medical supply manufacturing out of China and to the U.S. and “reliable trade partners” is something House Republicans would like to see as part of the next COVID-19 relief package.
The Office of the U.S. Trade Representative issued another set of product exclusions from the fourth group of Section 301 tariffs on goods from China. The new exclusions from the tariffs include "11 existing ten-digit HTSUS subheadings and 53 specially prepared product descriptions, which together respond to 242 separate exclusion requests," according to the notice. The product exclusions apply retroactively to Sept. 1, 2019, the date the fourth set of tariffs took effect. The exclusions will be in effect until Sept. 1.