The International Trade Commission recently issued two updates to the Harmonized Tariff Schedule to reflect changes for Section 301 tariffs on products from China. In Revision 4, the ITC implemented the increase in duties on tranche three of goods subject to the tariffs from 10 to 25 percent, as announced in early May (see 1905060040). The increase in duty rates for subheadings 9903.88.03 and 9903.88.04, as well as U.S. Notes 20(e) and 20(g) to subchapter III of chapter 99, took effect May 10. The subsequently issued Revision 5 implemented a new batch of exclusions from tranche one of the tariffs under new subheading 9903.88.08 and U.S. Note 20(k) to subchapter III, and made conforming changes to U.S. Note 20(a) and U.S. Note 20(b). It also implemented new subheading 9903.88.09 for goods subject to tranche three of duties that are still subject to a 10 percent duty because they were exported from China before May 10 and entered before June 1. U.S. Note 20(l) explains the new provision. Also in Revision 5 but unrelated to Section 301 tariffs, the ITC updated Statistical Annexes A and B of the HTS to reflect the new name of North Macedonia.
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.
CBP has responded to fast-moving developments in international trade with predictability and transparency, said Brenda Smith, CBP executive assistant commissioner-trade, while speaking May 16 at a U.S. Chamber of Commerce event. With the Section 301 tariffs and other trade remedies, the agency has given the trade community the necessary information "as quickly as we can provide it," Smith said. "Just last week, in response to a setback in the ongoing U.S.-China trade talks, CBP responded rapidly to the 15 percent increase in China 301 duties. We consulted closely with USTR and the International Trade Commission to streamline the operational impact of the administration's policy goals, provided guidance to CBP field employees and the trade community and expedited programming changes" to ACE "to ensure that trade continued to flow."
CBP on May 14 added the ability in ACE for importers to file entries with the fourth group of exclusions from the first tranche of Section 301 tariffs, it said in a CSMS message. Filers of imported products that were granted an exclusion should report the regular Chapter 84, 85 or 90 Harmonized Tariff Schedule number, as well as subheading 9903.88.08 for products subject to Section 301 duties on products from China but that have been granted an exclusion by the Office of the U.S. Trade Representative. “Do not submit the corresponding Chapter 99 HTS number for the Section 301 duties when HTS 9903.88.08 is submitted,” CBP said.
Only 453 8-digit Harmonized Tariff Schedule subheadings would not be covered by Section 301 tariffs on products from China, should the duties be imposed on the proposed fourth tranche of goods without any changes from the Office of the U.S. Trade Representative’s list. That’s only about 4 percent of the over 11,000 8-digit subheadings in the HTS, with the remainder being subject to tariffs of up to 25 percent.
International Trade Today is providing readers with some of the top stories for May 6-10 in case they were missed.
Smartphones are the largest of eight classifications of consumer technology products that would bear the biggest brunt of the 25 percent Section 301 tariffs proposed on $300 billion in imports not previously dutied during the U.S.-China trade war, according to the Consumer Technology Association’s top trade strategist. “The import values of the products that hit our members are massive,” emailed Vice President-International Trade Sage Chandler on May 14.
The Office of the U.S. Trade Representative is publishing its latest list of product exclusions from the first tranche of $34 billion in Section 301 tariffs on China (see 1905090067). This fourth list of exclusions includes full tariff schedule subheadings, as well as 35 subsets of tariff numbers in chapters 84, 85 and 90. The new exclusions take effect retroactively from July 6, 2018, when the $34 billion in tariffs originally entered into force, and will remain for one year following publication of USTR’s notice.
Some firms have moved contract production out of China, even though the items they import were only subject to a 10 percent tariff, according to Meredith DeMent, a senior associate in the international commercial practice at Baker McKenzie. DeMent said she personally has seen more than 10 companies move at least some production to other countries. But, she said, many were thinking that their goods might return to Most Favored Nation tariff levels soon, because news reports suggested the U.S. and China were headed toward a deal that would at least have "a phased scaling back of the tariffs."
The Office of the U.S. Trade Representative issued a fourth list of product exclusions from Section 301 tariffs on goods from China. The exclusions cover "515 separate exclusion requests" including five 10-digit subheadings that cover 86 separate requests and "35 specially prepared product descriptions" that cover 429 separate requests, according to a pre-publication copy of a notice posted to the agency’s website May 9. The product exclusions apply retroactively to July 6, 2018, the date the first set of tariffs took effect, and will remain in effect until one year after USTR publishes the notice in the Federal Register.
The Office of the U.S. Trade Representative notice on the increase in Section 301 tariffs for the third tranche of goods from China (see 1905080004) mentions that a new exclusion process will be coming for that group of products. The notice, which said that the tariffs will go from 10 percent to 25 percent for the third list of goods from China at 12:01 a.m. on May 10, also seems to indicate some differences from previous tariff implementation instructions on the timing.