The first set of products excluded from the initial tranche of Section 301 tariffs (see 1812240010) is hoped to be the beginning of good news from the Office of the U.S. Trade Representative, said David Cohen, a customs lawyer with Sandler Travis. "We hope that this is the first notification of many exclusions to be granted," Cohen said in an email. "Many of the articles subject to the tariff are those which are not related to the stated intent of the Section 301 action which is safeguarding technology and apply, in some cases, to products that utilize decades old commonly available technology. Moreover, the breadth of the coverage unfortunately sweeps in many products that in no way help China achieve her 2025 goals; for example a hand wrench is included. We hope the Administration continues to review the pending petitions and permit many other products to enter the US commerce free from the Section 301 duties."
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.
The U.S Trade Representative issued its first list of product exclusions from Section 301 tariffs on products from China, granting full or partial exemptions for 22 10-digit tariff subheadings, according to a pre-publication copy of a notice posted to the agency’s website Dec. 21. The product exclusions apply retroactively as of July 6, 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.
Although PricewaterhouseCoopers expects trade will not return to normal with China for more than three years, experts on a Dec. 20 webcast said clients are mitigating increased tariffs through a variety of strategies, including lowering customs value, bonded warehouse use, modifying tariff codes and negotiating with suppliers or customers. "Probably 20 percent can be mitigated without making any changes to the supply chain," said Scott McCandless, a trade policy specialist for the firm.
A former Office of the U.S. Trade Representative deputy predicted that the president of China and President Donald Trump would meet in the middle at the G-20 in Argentina, neither resolving the problems between the two countries nor declaring an impasse. He did not sound as confident that some kind of progress would be enough to halt the escalation in tariffs. "I think the signals from both countries are [that] they know this is an opportunity," Robert Holleyman said, as he opened a Nov. 28 Tariff Town Hall sponsored by tuna canneries. "I hope this gets us out of the current morass."
International Trade Today is providing readers with some of the top stories for Nov. 19-23 in case they were missed.
Cisco saw “immaterial” impact in its Q1 ended Oct. 27 from the 10 percent Section 301 tariffs that took effect Sept. 24 on $200 billion worth of Chinese imports, because the tariffs kicked in with only a month to go in the quarter, CEO Chuck Robbins said on a Nov. 14 earnings call. Though Cisco hiked prices on Chinese-sourced goods in Q1 to cover the higher tariff costs, it “saw absolutely no demand change” between the week before and the week after the price increases took effect, he said.
NEW YORK -- The Section 301 tariffs largely have spared apparel, but U.S.-China Business Council Vice President Erin Ennis told industry representatives that tariffs on all remaining Chinese goods could follow. "You should hope for the best, but, as businesses, you should be planning for the worst on that front," she said. "We're not at the end of this yet." Ennis was speaking at the Apparel Importers Trade and Transportation Conference Nov. 7.
A letter from 10 Democratic senators to U.S. Trade Representative Robert Lighthizer complained about the fact that no exclusion process has been set up for the nearly $200 billion in goods from China subject to an additional 10 percent tariff under Section 301. Sen. Tim Kaine, who led the letter, asked why there hasn't been an exclusion process for the third tranche, while there is one for the first and second rounds of the tariffs. The senators urged that an exclusion process be established immediately, given that this third tranche of tariffs is set to increase to 25 percent on Jan. 1. Kaine also asked if there is any intention to implement an exclusion application process, and if so, how it will be implemented. A group of House lawmakers also asked Lighthizer about the exclusions process earlier this month (see 1810160049). A Republican Senate trade staffer said Oct. 23 that USTR is not pursuing an exclusion process for this larger list. He said the office still hasn't granted any exclusions from the first two lists, and allowing applications for the third tranche would be a logistical problem.
U.S. Trade Representative Robert Lighthizer should put in place a process for exclusion from the 10 percent Section 301 tariffs on $200 billion worth of Chinese imports, which the Trump administration imposed last month (see 1809240015), a group of 169 members of Congress said in an Oct. 15 letter to the USTR. While the USTR allowed for exclusions to each of the first two lists of Section 301 tariffs, there's been no mention from the administration about a similar process for the latest list of tariffs. A wide range of industries asked the USTR for an exclusion process in a letter last month (see 1809270038).
International Trade Today is providing readers with some of the top stories for Sept. 24-28 in case they were missed.