Section 232 Investigations

On July 5, 2018, U.S. Customs and Border Protection (CBP) hosted a teleconference to review Section 301 filings requirements, allow members of the trade community to seek clarifications and raise questions, and outline resources CBP has in place.

The first set of Section 301 tariff increases is effective on July 6, 2018.

This is the second round of tariff increases following the recent Section 232 tariffs on steel and aluminum. CBP is highly interested in hearing from the trade community to ensure effective implementation of the new 301 tariffs. If a business or importer has specific questions or concerns, CBP encourages them to contact the agency at traderemedy@cbp.dhs.gov.

CBP recommends monitoring the Federal Register and USTR website for the forthcoming exclusion process. This will be provided in a separate Federal Register Notice (FRN).

There is also a second list of 284 tariff lines covering approximately $16 billion of imports from China under consideration for implementation. These were identified by the interagency Section 301 group and are currently undergoing a public notice and comment process, including a public hearing.

On the call, CBP clarified that the 25% tariff is limited to goods with a country of origin (CoO) and NOT a country of export, of the People’s Republic of China (excluding Hong Kong and Macao).

Other highlights are included below:

  • Free Trade Zones (FTZ): Goods entering as privileged foreign (PF) before 12:01 AM on July 6 will not be subject to, or assessed, the new duties. The FRN specifies applicability to products admitted to FTZs on or after the effective date. The notice does not discuss PF status prior to the effective date. It was confirmed that the ACE system has been updated to reflect this.
  • Harmonized Tariff Schedule of the U.S. (HTSUS) Subheading 9903.88.10 should be active in system.
  • There are no quotas related to Section 301. The ACE quota module is not being used and is not tied to Section 301 products. Members of the trade community should not receive any quota messages unless the product is subject to an applicable quota, however, CBP does not believe that the over 800 HS codes subject to the 25% tariff are also subject to an applicable quota.
  • If Chapter 98 provisions are applied correctly from a compliance perspective, then the rates of duty imposed under Section 301 will not apply. Importers must follow the instructions and properly file claims for HTSUS Chapter 98 entries.
  • Importers must report if a product meets the requirements of Section 301 by using the correct HTSUS Subheading (i.e., 9903.88.10).
  • De Minimis: It was noted that if a product meets Section 301 requirements and is under the $800 threshold, the shipment should follow existing procedures.
  • CBP has indicated that they will, under a case-by-case review approach, grant leeway to members of the trade community experiencing some of the more complicated questions and/or complex technical matters raised on the call. CBP has asked parties to document questions, so that they can be responded to. For example, there are open FTZ questions, questions related to sets and kits where an import specialist may be able to assist and/or a ruling needs to be requested.

The CBP web page for Section 301 trade remedies against China may be found here.

CBP announced it is developing a Section 301 Frequently Asked Questions (FAQs) web page.

 

 

 

This week will see the implementation of previously announced tariff increases from the U.S., China, and Mexico.

Thursday, July 5 – Section 232 (Mexico)

Mexico will implement the second round of its retaliation for the U.S.’ increased tariffs on imports of certain steel and aluminum products with additional tariffs of 10-15% on pork and cheese products.

Friday, July 6 – Section 301 (U.S. and China)

The U.S. will impose another 25% in duties on 818 tariff lines (see Annex B) worth $34 billion from China on July 6. The additional tariffs are part of the U.S.’ response to China’s alleged unfair trade practices related to “the forced transfer of American technology and intellectual property” pursuant to Section 301 of the Trade Act of 1974.

That same day, China has announced it will respond in kind by increasing duties on 545 tariff lines by the same amount. This action is also valued at $34 billion. Agricultural products, sport utility vehicles, and electric vehicles are among the goods targeted by China.

For all of the latest tariff news, please click here.

 

 

 

 

On June 29, 2018, Canada released its retaliatory tariff list in response to the U.S. Section 232 tariffs on imports of certain steel and aluminum products from Canada at the rates of 25% and 10%, respectively.

The list is broken out into three tables. Items in Table 1 will be subject to a 25 per cent surtax, while items in Tables 2 and 3 will be subject to a 10 per cent surtax.

Canada released an initial list for public consultation on May 31, 2018, and received over 1,000 submissions.

This final list is effective as of July 1, 2018. These countermeasures are against C$16.6 billion in imports of steel, aluminum, and other products from the U.S., representing the value of 2017 Canadian exports affected by the U.S. tariffs.

The announcement states the countermeasures will not apply to U.S. goods that are in transit to Canada on the day on which these countermeasures come into force.

Country Covered Products Rate Increase Effective Date
Canada For covered products, please click here. Table 1 – 25%
Table 2 – 10%
Table 3 – 10%
7/1/2018
Status: The Canadian government received over 1,000 submissions of public feedback during public consultations on its original list.

Canada is imposing countermeasures against C$16.6 billion in imports of steel, aluminum, and other products from the U.S., representing the value of 2017 Canadian exports affected by the U.S. tariffs.

On June 21, 2018, the U.S. Department of Commerce published in the Federal Register an extended commenting schedule in the Section 232 investigation on U.S. imports of automobiles, including cars, SUVs, vans and light trucks, and automotive parts.

Commerce is now extending that comment period by a week from the initial deadline.

Interested parties are invited to submit comments, data, analyses, or other information pertinent to the investigation by June 29, 2018. Rebuttals to any  comments are now due by July 13, 2018.

June 29, 2018 is also the deadline for requesting to appear at the public hearing and for submissions of a summary of expected testimony. The public hearing will continue to be held on July 19 and 20, 2018 in Washington, DC.

Commerce initiated the Section 232 national security investigation on U.S. imports of automobiles and auto parts on May 23, 2018. Similar to the earlier completed 232 investigations on steel and aluminum, the investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security as defined in Section 232. For details, please click here, and here.

 

Last Updated on 8/16/2018: added link to Federal Register Notice formalizing China List 2 Section 301 tariffs.

Update on 8/14/2018: added new Section 232 tariff of 50% on steel from Turkey.

Update on 8/8/2018: added China’s retaliatory tariffs on $16 billion – List of affected HTS Subheadings includes additional 219 tariff items, plus tariff rate of 25%.

U.S. Trade Actions

Action Covered Products Rate Increase Effective Date
Section 232 Steel and Aluminum Steel – 25%
Aluminum – 10%
6/1/2018
Status: Steel – all countries of origin except South Korea, Brazil, and Argentina (agreed to quotas); and Australia (exempted).

Aluminum – all countries of origin except Argentina (agreed to quota); and Australia (exempted).

Beginning August 13, steel articles covered by Section 232 from Turkey are subject to an ad valorem duty rate of 50%.

Section 232 Autos and Automotive Parts TBD TBD
Status: For the latest status, please click here.
Section 301 For covered products in List 1, please click here.

 

For the latest version of products in List 2, please click here.

 

For covered products in List 3, please click here and see the Annex.

25%

 

25%

 

 

25%

7/6/2018

 

8/23/2018

 

 

TBD

Status: List 1 totaling $34 billion worth of imports is composed of 818 tariff lines, and went into effect on 7/6/2018.

List 2 totaling $16 billion worth of imports is composed of 284 proposed tariff lines identified by the interagency Section 301 Committee. 279 of the 284 lines go into effect on 8/23/2018.

For full details on List 2, please click here.

List 3 includes a list of tariff lines of products from China with an annual trade value totaling approximately $200 billion. These are also subject to a public review process

For full details on List 3, please click here.

For information on changes to the public review process announced on August 1, please click here.

Unofficial searchable and filterable spreadsheet with tabs for all three U.S. Section 301 tariff lists.

Retaliatory Actions

 

Canada For covered products, please click here. Table 1 – 25%
Table 2 – 10%
Table 3 – 10%
7/1/2018
Status: The Canadian government received over 1,000 submissions of public feedback during public consultations on its original list.

Canada is imposing countermeasures against C$16.6 billion in imports of steel, aluminum, and other products from the U.S., representing the value of 2017 Canadian exports affected by the U.S. tariffs.

EU For covered products, please click here. Annex I – 10% or 25%
Annex II – 10% – 50%
Annex I – 6/22/2018
Annex II – 3/23/2018 or 5th day after WTO Dispute Settlement Body rules against the U.S. action, whichever is first.
Status: For the latest status, please click here.
Mexico For the translated list of covered products, please click here. 7% – 25% (pages 1-4)

 

10% – 15% (page 5)

6/5/2018

7/5/2018

Status: Most retaliatory measures effective as of 6/5/2018. An “exception” list is effective on 7/5/2018.
China (Response to Section 232 Tariffs) For covered products, please click here. Annex I – 15% – 25% 4/3/2018
Status: For the latest status, please click here.
China (Response to Section 301 Tariffs) For covered products in List 1, please click here.

(Unofficial Version)

 

For covered products in List 2, please click here.

(Unofficial Version)

For covered products in List 3 (announced August 3), please click here.

(Unofficial Version)

25%

 

25%

 

TBD

7/6/2018

 

8/23/2018

 

TBD

Status: List 1 is composed of 545 tariff lines, and goes into effect on 7/6/2018.

List 2 contains 333 tariff lines on U.S. goods worth $16 billion. Start date is 8/23/2018.

List 3 contains 5,207 tariff lines on U.S. worth $60 billion. Start date is unknown.

India For covered products, please click here. Up to $10.6 billion;
Annex I – 5% – 100%
6/21/2018
Status: The U.S. declined India’s request for WTO consultations. Thus leading to India’s retaliation tariffs on U.S. goods, effective immediately.
Japan For covered products, please click here. Up to $1.91 billion TBD – no earlier than March 23, 2021, or the 5th day following the date of a decision from the WTO DSB, whichever comes first.
Status: No update since May 18, 2018. Ambassador Lighthizer is holding trade talks with Economy Minister Motegi in July. Under Secretary McKinney is also leading a trade mission to Japan to discuss a possible bilateral trade deal.
Russia For covered products, please click here. Up to $3.16 billion TBD
Status: Russia will apply the proposed suspension of equivalent concessions upon the expiration of 30 days from the day on which Council on Trade in Goods has been notified. The suspension will continue until the U.S. lifts the safeguard measures.
Turkey For covered products, please click here. Up to $1.78 billion;
Annex I – 5% – 40%
6/21/2018
Status: The U.S. declined Turkey’s request for WTO consultions due to the provisions of the Safeguard Agreement. The Government of Turkey proposed the suspension of equivalent concessions starting June 21, 2018.

Update on 8/7/2017: added USTR’s final list of covered products for Section 301 List 2 tariffs with 25% tariff rate.

Update on 8/3/18: added China’s latest Section 301 (List 3) retaliatory tariffs.

Update on 8/2/2018: changed the proposed rate for China Section 301 List 3 from 10 percent to 25 percent.

Update on 7/13/2018: added link to an unofficial searchable and filterable spreadsheet listing the tariff codes for all three current U.S. Section 301 tariff lists (see last line in Section 301 Status).

Update on 7/11/2018: added new U.S. Section 301 tariffs announced on 7/10/2018.

Update on 7/2/2018: added EU Annex I tariffs effective.

Update on 6/29/2018: added Canadian retaliatory tariffs.

Update on 6/21/2018: added India, Japan, Russia, and Turkey.

Update on 6/18/2018: added China’s Section 301 retaliatory tariffs.

Update on 6/15/2018: added new U.S. Section 301 tariffs; added translated version of Mexican retaliatory measures and updated Mexico section.

 

 

 

 

 

 

 

 

 

 

 

On June 6, the European Commission (Commission) issued a press release stating, “The College of Commissioners endorsed today the decision to impose additional duties on the full list of US products notified to the World Trade Organisation (WTO), as part of the EU’s response to the US tariffs on steel and aluminium products.”

The release went on to state, “Following today’s decision to apply additional duties to selected imports from the United States, the Commission expects to conclude the relevant procedure in coordination with Member States before the end of June so that the new duties start applying in July.”

The Commission asserts the “rebalancing duties is fully in line with WTO rules, and corresponds to a list of products previously notified to the WTO. The WTO Safeguards Agreement allows for a rebalancing corresponding to the damage caused by the US measures with EU exports worth €6.4 billion (2017) being affected. The EU will therefore exercise its rights immediately on US products valued at up to €2.8 billion of trade. The remaining rebalancing on trade valued at €3.6 billion will take place at a later stage – in three years’ time or after a positive finding in WTO dispute settlement if that should come sooner.”

The retaliation tariffs (the rebalancing duties) may be found here. Those expected to begin in July are listed in Annex I (almost all at 25 percent). Annex II contains those to begin in three years, or after a positive finding in WTO dispute settlement. Those tariffs range from 10 to 50 percent.

 

On June 5, U.S. Customs and Border Protection (CBP) issued a message providing instructions for importers who receive approval for a steel or aluminum product exclusion from the Department of Commerce (DOC).

The message states, “Upon receipt of the approved product exclusion from the DOC, for the importer of record listed in the approved exclusion, please provide that company’s name, address and importer of record number, and the associated product exclusion number, to U.S. Customs and Border Protection (CBP) at Traderemedy@cbp.dhs.gov. You must provide this information to CBP before the importer of record submits the exclusion number with entries to CBP.”

Further instructions on how to provide the information are included.

It adds, “Exclusions granted by DOC are retroactive on imports to the date the request for exclusion was posted for public comment at Regulations.gov. To request an administrative refund for previous imports of excluded products granted by DOC, importers may file a Post-Summary Correction (PSC) and provide the product exclusion number in the Importer Additional Declaration Field.”

The message also states if an “entry has already liquidated, importers may protest the liquidation.”

 

 

Media sources are reporting the Department of Commerce will not consider steel and aluminum product exclusions for countries subject to quotas. Only countries facing the tariffs will be considered for product exclusions.

Currently, South Korea, Brazil, and Argentina have agreed to an absolute quota deal on certain steel products that are subject to the Section 232 tariffs.

The steel quotas are separated into 54 subcategories for South Korea, Argentina, and Brazil. Argentina has already reached its absolute quota for 40 of the 54 subcategories, while 18 subcategories have been filled for Brazil, and 9 have been filled for South Korea.

As of June 1, 2018, all countries of origin except Argentina and Australia are subject to the 10 percent tariff on aluminum products. Argentina agreed to cap exports of aluminum at 100 percent of the average exports to the U.S. over the last 3 years. The absolute quota is divided into two subcategories, equaling over 180,000 short tons per year.

Once a country reaches its quota for the quota period no entry for consumption of the product will be permitted.

Australia is currently the only country to have maintained a country-based exemption without having agreed to a quota regime.

 

 

On May 31, 2018, the Department of Commerce announced the imposition of tariffs on imported steel and aluminum products from Canada, Mexico, and the European Union (EU). The 25 percent tariff on imported steel and the 10 percent tariff on imported aluminum products officially took effect on June 1, 2018. Canada, Mexico, and the EU had been temporarily exempted from the Section 232 tariffs during the ongoing renegotiation of NAFTA and trade discussions with the EU.

In response to the Section 232 measures, all three countries immediately condemned President Trump’s decision to eliminate the temporary country exemptions.

Canada unveiled a trade-restrictive tariff list valued at over $12.8 billion worth of U.S. products that will take effect on July 1, 2018 and will remain in place until the U.S. terminates the steel and aluminum tariffs on Canada. The scope of countermeasures is separated into two tables. Table 1 includes steel and aluminum products, which will be subject to a 25 percent duty; while goods selected from Table 2 will be subject to a 10 percent duty. Canada lodged a WTO challenge last Friday and is also asking for the establishment of a NAFTA dispute settlement panel.

Earlier in May, the EU also published two retaliation lists targeting American exports that could reach up to $7.5 billion. The first phase of tariffs will be implemented on June 20th, which will equal 2.8 billion euros (over $3.3 billion USD) worth of U.S. goods. The second phase will either be implemented on March 23, 2021, or the 5th day following the date of the adoption by, or notification to, the WTO Dispute Settlement Body of a ruling that the U.S. Section 232 tariffs violate the WTO Agreement, whichever comes first.

Mexico announced on June 4 that it “will initiate a dispute settlement process against the U.S. at the WTO.” Furthermore, Mexico’s Ministry of Economy published a list of U.S. goods that will be subject to equivalent measures to the Section 232 tariffs – including flat steel, lamps, pork legs, sausages, food preparations, apples, grapes, blueberries, various cheeses, and other products.

Please click here for the full list in Spanish.

 

 

On May 31, 2018, President Trump signed two new presidential proclamations adjusting steel and aluminum duties initiated under Section 232 of the Trade Expansion Act of 1962.

These ended temporary exemptions of duties for imports of steel and aluminum products from the European Union (EU), Canada, and Mexico. As a result, a 25 percent duty on steel products and a 10 percent duty on aluminum products are now being collected on imports from those countries.

President Trump originally announced the Section 232 tariffs on March 8, 2018. However, on March 22, he temporarily exempted imports of steel and aluminum from Australia, Argentina, South Korea, Brazil, Canada, Mexico, and EU member countries from the tariffs until May 1, 2018. President Trump subsequently extended this deadline to June 1.

The most recent May 31 proclamations continued tariff exemptions for imports from Brazil, Argentina, and South Korea, as those countries negotiated quotas restricting steel and aluminum exports to the U.S. The Proclamations announced the aggregate limits of imports from Argentina and Brazil, while the administration previously announced specific quota amounts for steel products from South Korea on April 30, 2018. The only country exempted from the tariffs and not subject to quotas is Australia.

A statement issued by the White House noted that “measures are in place to address the impairment to the national security threatened by imports of steel and aluminum from Argentina, Brazil, and Australia” and that “similar measures are not in place with respect to steel or aluminum imports from Mexico, Canada, or the European Union.” The statement also said “the Administration will continue discussions with [Mexico, Canada, and the European Union] and remains open to discussions with other countries.”