Using Section 301 Tariff Exclusions

By: James Holbein, Of Counsel, Braumiller Law Group

The window for filing a request for exclusions from the tariffs imposed by the Trump Administration on goods from China closed in late January.  However, the process of granting exclusions is unfolding very slowly. 

Tranches One and Two:  The exclusions granted under the first two tranches of tariffs have expired and the renewal period is over.  This impacts mainly goods in Chapters 84, 85 and 90, covering machinery, equipment, electronic goods and other products.  Surprisingly, requests to renew exclusions granted for those tranches were filed for only a small percentage of the exclusions granted.

Tranche Three:  For goods covered by the third tranche, $200 billion in trade, the USTR team is working through the request and granting roughly 100 every two weeks.  In order to respond to as many of the 30,000 requests as possible, the processing team at USTR is grouping them by HTS number and trying to write broad product descriptions that can encompass many product requests, rather than deal with each request specifically.  As a consequence, many of the exclusions cover broad groups of goods in many 8-digit tariff subheadings.  Therefore, even if a company has not filed a request for an exclusion, if they trade in products covered by an exclusion, they can request the tariff relief granted for the broader category named in the exclusion.

Tranche 4 Exclusions:  Exclusion requests for the fourth tranche of $300 billion (roughly 8,800 filed) will take USTR months to process. They are using the same approach of grouping each request by tariff number and writing tariff descriptive language to cover a whole class of goods, rather than specific products.  Importers of goods eligible to use the exclusions do not have to be one of the requestors.  Tariff relief is available to any importer of goods covered by exclusions. 

Checking for Exclusions:  It can be time-consuming and confusing for a company to check each biweekly posting of new exclusions to determine whether they possibly apply to goods the company imports.  We can assist companies to review each list of product exclusions and alert your company to the availability of tariff relief as this months-long process of granting exclusions unfolds. 

Extension Requests Soon:  Note also that any product exclusions for the $200 billion third tranche expire on August 7, 2020 and the exclusions for the $300 billion fourth tranche expire on September 1, 2020, one year from the effective date of the additional duties.  Companies seeking to request an extension should begin preparation of the documents this summer, in June and July, (or sooner) in order to meet the August and September deadlines.  In order to apply for extensions, USTR will have to notify the public of that process, with a list of documents required to renew the exclusions.  This requirement and the early expiration work is a hardship on the trade, because USTR is unlikely to finish granting all of the exclusions prior to their expiration dates. 

For Assistance:  If you would like assistance to determine whether products you import from China are covered by tariff exclusions, please contact james@braumillerlaw.com for further assistance.