The Office of the U.S. Trade Representative (USTR) has published the first list of products from China that will be excluded from the additional 25% duty imposed under Section 301. The products were originally published on the USTR’s List 1, which included $34 Billion worth of goods from China. The USTR granted 984 exclusion requests, covering 21 separate HTS codes. Product exclusions will be retroactive to July 6, 2018, the effective date of the $34 billion action, and will remain in effect through December 27, 2019.
The excluded products fall under the following 10-digit HTSUS subheadings, as well as 24 specially prepared product descriptions.
The 24 specially prepared product descriptions cover certain plastic salad spinners, nonelectric water filtration apparatus, radiation therapy systems, thermostats designed for HVAC systems, spark-ignition engines for marine propulsion, winches, elevators, work stands, belt conveyors, and stainless steel guards, scrapers, and suction boxes. To view the full list of excluded products, click here.
According to the USTR, the exclusions are available for any product which meets the specific product descriptions, regardless of whether the importer filed an exclusion request. The scope of each exclusion is governed by the scope of the 10-digit sub-headings and the specific product descriptions, not by the product descriptions set out in any particular request for exclusion.
Section 301 product exclusions must be claimed using the new HTSUS subheading 9903.88.05, but U.S Customs and Border Protection (CBP) announced that it is not yet accepting claims. Due to the government shutdown, CBP has not been able to update the Automated Commercial Environment (ACE) to reflect the exclusions. CBP anticipates ACE will be updated to reflect the changes ten business days after the ongoing federal government shutdown has concluded. In the meantime, importers will have to continue paying the additional tariff on the affected goods. Entries and entry summaries of such goods must be submitted without the HTSUS Chapter 99 product exclusion number. Any product submitted under HTSUS subheading 9903.88.05 will be automatically rejected by ACE.
CBP will issue instructions to claim the product exclusion once the ACE enhancements have been implemented. At that time, filers may submit post-summary corrections or protests to obtain the refunds.
Requests for product exclusions from Section 301 List 2, which imposed a 25% tariff on $16 Billion worth of Chinese goods, were due to USTR on December 18, but no exclusions have been announced yet.
U.S. Trade Representative Robert Lighthizer announced that the Trump Administration will not initiate a process for excluding goods on List 3 for the 10% duties on $200 Billion worth of Chinese goods until at least March. The Administration will only initiate an exclusion process for goods appearing on List 3 if ongoing negotiations with China fail and the tariff increases from 10% to 25% on March 1.
In addition, Lighthizer said that these goods cannot be exempted from the tariffs by being entered into a free-trade zone (FTZ). “Longstanding rules and practices governing such entries continue to apply.” The USTR went on to say “as of this time, we have not found a basis for exempting U.S. importers who use FTZs from the additional duties, when those duties apply to all other U.S. importers.”
The USTR will continue to issue decisions on pending exclusion requests, and periodically announce those decisions on their website located at https://ustr.gov/issue-areas/enforcement/section-301-investigations/request-exclusion.