Section 301 Tariffs

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On September 18, 2018, the United States Trade Representative (USTR) published a notice in the Federal Register explaining the procedures and criteria related to requests for product exclusions from the additional tariffs placed on goods from China on August 23, 2018.

Deadlines

The USTR must receive requests to exclude a particular product by December 18, 2018. Responses to a request for exclusion of a particular product are due 14 days after the request is posted in the docket. Any replies to responses to an exclusion request are due the later of 7 days after the close of the 14 day response period, or 7 days after the posting of a response.

Per the notice, a docket will be opened on regulations.gov for the receipt of exclusion requests. The docket number is USTR–2018–0032. One product is allowed per request. Each request must identify a specific product and the 10-digit HTS. The product exclusion request must include the identity of the product, its physical characteristics and how to differentiate that product from others under the 8-digit HTSUS subheading. The USTR will not consider requests that identify the product using criteria that cannot be made public, or that identify the product by using the producer, importer, customer, chief use, trademark or trade name.

The USTR will periodically announce decisions on exclusion requests. If granted, the exclusion will be retroactively effective starting August 23, 2018 and extend for one year after the date on which the decision is published in the Federal Register.

 

On September 13, 2018, President Trump signed the Miscellaneous Tariff Bill (MTB) Act of 2018 (MTB), which temporarily reduces or eliminates import duties on specified raw materials and intermediate products used in manufacturing that are not produced or available domestically. It is intended to ensure that U.S. manufacturers are not at a disadvantage to their foreign competitors when sourcing manufacturing components.

The American Manufacturing Competitiveness Act of 2016 (AMCA) directed the International Trade Commission (ITC) to establish a process for the submission and consideration of MTB petitions for duty suspensions and reductions. It required the ITC to submit preliminary and final reports on the petitions to the House Committee on Ways and Means and the Senate Committee on Finance (Committees). The ITC’s preliminary report was submitted on June 9, 2017 and the final report was submitted on August 8, 2017. On September 4, 2018, the House agreed to Senate amendments, moving the legislation to the president for signature. The current MTB petition cycle is now complete. The next MTB petition cycle, for 2021 through 2023, will begin not later that October 15, 2019.

The duty suspensions and reductions are effective for goods entered or withdrawn from a warehouse for consumption on or after October 13, 2018, which is 30 days after the date of the enactment.  The suspensions and reductions will last until December 31, 2020. All of the MTB provisions are in subchapter II to chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS). This language was added in a Federal Register Notice on August 16, 2018 (83 Fed Reg 40,823 at page 40,825). The notice also created a new U.S. Note 20(c) to Subchapter II of Chapter 99, HTSUS.

Of the 1,660 items are covered by the new law, roughly half are produced in China. Therefore, overlap between the MTB list and the Section 301 tariffs in effect, and those being considered exists. Goods originating in China are still subject to relevant Section 301 tariffs.  On August 21, 2018, U.S. Customs and Border Protection (CBP) issued a message stating, “Products of China that are covered by the Section 301 remedy and that are eligible for special tariff treatment…or that are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99, shall be subject to the additional 25 percent ad valorem rate of duty imposed by headings 9903.88.01 and 9903.88.02.

The Office of the U.S. Trade Representative (USTR) is holding public hearings from August 20 to August 24, 2018, and on August 27, 2018, regarding the proposed tariffs on approximately $200 billion worth of Chinese products.

Click here to view a schedule of witnesses. The public hearings are being held at the following times at the U.S. International Trade Commission in Washington, DC:

  • Monday, August 20, 2018 from 9:30 AM – 6:00 PM EDT
  • Tuesday, August 21, 2018 from 9:30 AM – 6:00 PM EDT
  • Wednesday, August 22, 2018 from 9:30 AM – 6:00 PM EDT
  • Thursday, August 23, 2018 from 9:30 AM – 6:00 PM EDT
  • Friday, August 24, 2018 from 9:30 AM – 6:00 PM EDT
  • Monday, August 27, 2018 from 9:30 AM – 4:00 PM EDT

According to a USTR press release, the proposed tariffs are in response to China’s unfair trade practices related to technology transfer, intellectual property, and innovation, based on the findings in USTR’s investigation of China under Section 301 of the Trade Act of 1974.

Tariffs on $34 billion in goods from China are currently in effect, and tariffs on an additional $16 billion will take effect on August 23, 2018.

The Federal Register notice publishing the proposed tariff list and soliciting public comment can be viewed here.

 

 

On August 16, 2018, the Office of the U.S. Trade Representative (USTR) published in the Federal Register the formal notice for the China Section 301 tariffs beginning on August 23.

The USTR published the final list of 279 Harmonized Tariff Schedule of the United States (HTSUS) subheadings known collectively as ‘List 2’ on August 7, 2018. These tariff lines will see an additional ad valorem duty of 25% on products from China and is worth $16 billion.

Unlike the notice implementing List 1 from June 20, 2018, the USTR:

  • Added to Annex A of this notice clarifications on the application of the additional duties to goods entered under certain provisions of Chapter 98 and 99 of the HTSUS;
  • In Annex C to this notice, modifies the HTSUS note in Annex A to the June 20 notice in order to reflect these clarifications; and
  • Annex C makes a conforming amendment to the HTSUS heading in Annex A to the June 20 notice, and makes a technical correction to the HTSUS note in Annex A to the June 20 notice.

The tariff subheadings in Annex A and B are the same. The latter list includes unofficial descriptions of the types of products covered in each subheading.

Regarding product exclusions, the notice states, “…the Trade Representative has determined that USTR will establish a process by which U.S. stakeholders may request that particular products classified within an HTSUS subheading listed in Annex A be excluded from these additional duties. The process will be comparable to the exclusion process established in connection with the initial, $34 billion trade action. USTR will publish a separate notice describing the product exclusion process, including the procedures for submitting exclusion requests, and an opportunity for interested persons to submit oppositions to a request.”

Check here for the latest developments on all the on-going trade actions.

 

On August 8, China released its list of retaliatory tariffs on $16 billion in U.S. goods. This was in direct response to the USTR’s announcement on August 7 of the final List 2 of Section 301 tariffs on $16 billion in Chinese imports. The Chinese Ministry of Finance’s list released today includes an additional 219 tariff items that were added to the list China originally released back in June. Both the U.S. and China are setting tariff rates at 25% for this second tranche of goods and plan to implement the duties on August 23.

Please click here for an unofficial English version of the HTS Subheadings on the Chinese list.

For an overview of the current U.S. Section 301 tariff status, please click here.

 

 

 

 

 

On August 7, 2018, the United States Trade Representative (USTR) released a final list of approximately $16 billion worth of imports from China that will be subject to a 25 percent additional tariff. The list contains 279 of the original 284 tariff lines that were on a proposed list announced on June 15.

Update: the five tariff items that were excluded from the final List 2 are:

3913.10.00 Alginic acid, and its salts and esters, in primary forms
8465.96.00 Splitting, slicing or paring machines for working wood, cork, bone, hard rubber, hard
plastics or similar hard materials
8609.00.00 Containers (including containers for transport of fluids) specially designed and
equipped for carriage by one or more modes of transport
8905.90.10 Floating docks
9027.90.20 Microtomes

Changes to the proposed list were made after USTR and the interagency Section 301 Committee sought and received written comments and testimony during a two-day public hearing last month. Customs and Border Protection will begin to collect the additional duties on the Chinese imports on August 23.

A formal notice of the $16 billion tariff action will be published in the Federal Register. Please contact us if you have any questions or need assistance.

 

NOTE – this post was updated on 9/19/2018 to reflect the change in retaliation duties on affected U.S. goods.

In a press release issued on August 1, United States Trade Representative (USTR) Robert Lighthizer announced the President directed him to consider increasing the proposed level of the additional duty on the latest Section 301 List (List 3 worth $200 billion) from 10% to 25%.

On August 3, China responded in kind and threatened to increase retaliatory tariffs on $60 billion in U.S. goods should President Trump move forward with new tariffs on imports from China.

In addition to USTR’s proposed action on List 3, the second U.S. Section 301 List (worth $16 billion) just finished a public comment process. The White House has not announced its decision on List 2 as of yet. For an overview of the current U.S. Section 301 tariff status, please click here.

On 9/19/2018, China announced the rates would be 5 or 10%, instead of 5, 10, 20, or 25%.

Please click here for an unofficial version of the HTS Subheadings for Annex 1 (10% instead of 25%).

Please click here for an unofficial version of the HTS Subheadings for Annex 2 (10% instead of 20%).

Please click here for an unofficial version of the HTS Subheadings for Annex 3 ( 5% instead of 10%).

Please click here for an unofficial version of the HTS Subheadings for Annex 4 remain set at 5%.

 

 

 

 

President Trump has directed the Office of the United States Trade Representative (USTR) to consider increasing the proposed tariffs under Section 301 from 10% to 25% for the entire $200 billion list (also known as “List 3”). Because of this, the USTR has extended several of the dates in the public comment process.

The USTR circulated an e-mail on August 2 to parties that had submitted a request to appear in the upcoming Section 301 hearing for the “List 3” products. In it, the USTR clarified information provided in a press release on August 1.

To summarize:

  • The due date for filing requests to appear and a summary of expected testimony at the public hearing and for filing pre-hearing submissions is extended from July 27 to August 13, 2018.
  • The due date for submission of written comments is extended from August 17 to September 5, 2018.
  • The due date for submission of post-hearing rebuttal comments is also extended from August 30 to September 5, 2018.
  • The scheduled start date of the Section 301 hearing (August 20) has not changed.
    • The Section 301 Committee may extend the length of the hearing depending on the number of additional interested persons who request to appear. As of now, the hearing is scheduled to take place from August 20 to August 23.
    • The USTR will provide the full hearing schedule the day before the hearing, per USTR policy.

 

 

 

 

On July 24-25, 2018, the Office of the United State Trade Representative (USTR) held public hearings regarding proposed tariffs on approximately $16 billion of Chinese products.

Rebuttal comments are due on Tuesday, July 31, 2018.

The list identifying these products (also known as “List 2”) was released last month and represents 284 new tariff lines identified by the interagency Section 301 Committee as “benefiting from Chinese industrial policies, including the “Made in China 2025” industrial policy.”

Section 301 For covered products in List 1, please click here. 25% 7/6/2018
For covered products in List 2, please click here. TBD TBD
For covered products in List 3, please click here and see Annex 10% 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. This was the subject of the hearings.

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.

The Committee heard testimony from over 80 witnesses on whether to include certain tariff lines in List 2. The witnesses represented trade organization and corporations of all sizes. The USTR intends to publish a transcript of the hearing, but did not provide a date.

Most of the witnesses requested that the Committee remove specific tariff lines from the list. The most common justifications were as follows:

  • The United States has a trade surplus in a particular good, and the 301 duties would harm that industry;
  • The increased duties would:
    • lead directly to the loss of U.S. manufacturing jobs;
    • lead directly to an increase in the price of goods to the U.S. consumer; and
    • would have no effect on China’s intellectual property practices;
  • The goods targeted on List 2:
    • are only available from China; and
    • are not relevant to the “Made in China 2025” program.

Witnesses who supported the Section 301 duties asserted that they were necessary to protect U.S. manufacturing concerns and that sufficient capacity existed in the United States to manufacture the listed products.

The Committee asked questions of the witnesses when their testimony was complete. The questions fell into several broad categories:

  • Would the Section 301 duties affect the cost and availability of medical devices?
  • Why isn’t current U.S. manufacturing capacity available to meet U.S. demand?
  • Are the listed goods available from non-Chinese foreign suppliers?
  • How long would it take to increase production in the U.S., or to requalify a new non-Chinese supplier?

 

When preparing rebuttal comments, the Committee’s questions to the witnesses should be considered.

On July 10, 2018, U.S. Trade Representative (USTR) Robert Lighthizer announced that at President Trump’s request, USTR has initiated the process of imposing an additional 10 percent ad valorem duty on approximately $200 billion worth of imports from China.

The USTR statement included a link to an advance copy of the Federal Register Notice with the list of proposed tariffs and the process for the public notice and comment period.

This is the formal publication in the Federal Register of this notice.

For more information on the proposed tariffs and the process for the public notice and comment period, please see our previous article.