July update on China Section 301 tariffs: latest from China-US talks
At a recent G20 Summit press conference, President Trump said that he would not lift the existing Section 301 tariffs on China, but would also not add tariffs on any additional Chinese imports "for at least the time being" as part of an agreement to resume negotiations with China. This article summarises the current status of the Section 301 List 4 goods and the List 3 product exclusion process which commenced on 30 June 2019.
At a press conference at the G20 Summit in Japan on 29 June 2019, President Trump said that he would not lift the existing Section 301 tariffs on China, but would also not add tariffs on any additional Chinese imports "for at least the time being" as part of an agreement to resume negotiations with China.
There has been no formal announcement by the White House or the Office of the US Trade Representative (USTR) on when negotiations will resume.
Below is a summary of the current status of the Section 301 List 4 goods and the List 3 product exclusion process which commenced on 30 June 2019.
Section 301 List 4 goods
Trump's announcement indicates that tariffs on the List 4 goods would not be assessed while negotiations resume between the United States and China. The US government recently held seven days of hearings where dozens of witnesses spoke on the affect that the tariffs have had on their businesses. Transcripts of the hearings have been posted on the USTR website. According to the USTR, the List 4 tariffs would cover approximately $300 billion in goods imported from China and a wide range of consumer goods.
However, if the past is any guide, the tariffs could be put into place quickly if ordered by the president – essentially any time after the rebuttal/surrebuttal period from the hearings end on 10 July 2019. US Trade Representative Lighthizer previously indicated that there would be an exclusion process if List 4 tariffs were put in place.
Section 301 List 3 exclusion process now underway
On 20 June 2019 the USTR published a notice which outlined the procedure for requesting exclusions from List 3 of the Section 301 tariffs on Chinese imports via a new web portal.
The portal opened for submissions on 30 June 2019 and submissions are due by 30 September 2019. Granted exclusions will be retroactive to the Section 301 effective date of 24 September 2018 (for further details please see "Customs issues guidance on how to preserve refund rights for Section 301 product exclusions"). The notice includes a sample of the new exclusion request form to facilitate the preparation of exclusion request information before the web portal opened on 30 June 2019.
Section 301 List 3
Section 301 List 3 covers $200 billion worth of Chinese goods and 5,745 product lines defined at the eight-digit level of the Harmonised Tariff Schedule of the United States. Major product categories include, among other things:
Pursuant to a 9 May 2019 notice published by the USTR, the tariff rate applicable to List 3 was increased from 10% to 25% on 10 May 2019 (for further details please see "Section 301 update: List 3 increases top 25%, a possible exclusion process and a new List 4?")
Dates and deadlines
Companies must consider the following dates:
On 30 June 2019 the web portal for exclusion requests was opened.
The deadline for submitting exclusion requests is 30 September 2019.
The deadline for responses to individual requests is 14 days after the request is posted to the public on the online portal.
The deadline for replies to responses to individual requests is seven days after the close of the 14-day response period or seven days after the posting of a response (whichever is later).
Preparing for implementation of List 3 exclusion process
Companies are urged to be strategic in considering a request for exclusion as there are several factors to be considered apart from the data required, including the number of exclusion requests to be made and product groupings within each exclusion request. Often with the List 1 applications, the USTR will create a 'carve out' for specific products within a 10-digit subheading based on the product description provided in a granted exclusion request.
Companies should also provide as much information as possible when submitting exclusions, including:
specific information on the number of jobs and location of jobs in the United States that have been affected by the tariffs; and
information on the likelihood (or even document attempts) to obtain domestic sourcing for the products.
There are business confidential fields to provide proprietary and sensitive information.