On Monday, October 4, U.S. Trade Representative Katherine Tai delivered a long anticipated speech framing the Biden Administration’s trade policy toward China.
Among the announcements made were that (1) a Section 301 product exclusion process would be “restarted” with respect to the tariffs currently in effect, and (2) additional enforcement actions against China could be
Last Friday, the Office of the United States Trade Representative (“USTR”) issued lists of products from six countries that may be subject to additional 25 percent tariffs. The proposed product lists identified by USTR are designed to offset digital services taxes (“DST”)[1] imposed by Austria, India, Italy, Spain, Turkey and the United Kingdom, and
On October 28, 2019, the Office of the United States Trade Representative (USTR) announced plans to begin considering extensions of up to one year for certain previously-granted product exclusions from Section 301 tariffs on Chinese imports. From November 1 – November 30, USTR will accept comments for or against product exclusions that are set to expire December 28, 2019.
The relevant product exclusions were granted December 28, 2018 in USTR’s initial set of exclusions from Section 301 duties on Chinese imports that took effect July 6, 2018. The 25 percent tariff covered more than 800 tariff lines, representing approximately $34 billion in annual trade value. In its December 28 action, USTR granted exclusions for more than 1,000 specific products classified within a tariff-covered 8-digit HTSUS subheading.
USTR subsequently issued seven more rounds of product exclusions from its July 6, 2018 tariff action (all expiring one year from the date of publication in the Federal Register) and continues considering exclusion requests for subsequent tariff actions. While additional extension request opportunities are anticipated going forward, the current opportunity only covers exclusions granted on December 28, 2018.
As detailed in a draft Federal Register Notice, USTR will evaluate the possible extension of each exclusion on a case-by-case basis. USTR has indicated it will focus its evaluation on whether the product under consideration remains only available from China. USTR will also consider whether additional duties would result in severe economic harm to U.S. interests. Additionally, USTR has asked commenters to address:
Continue Reading USTR Begins Process to Consider Extending Certain Section 301 Product Exclusions
On October 18, the United States Trade Representative announced an exclusion process for products included on China Section 301 List 4A, which covers $300 billion of imports. Imported products on this list are presently subject to an additional 15 percent duty, which went into effect September 1, 2019.
Importers of products on List 4A
Last June, pursuant to Section 301 of the Trade Act of 1974, President Trump announced the imposition of a tariff of 25 percent on certain imported goods from China (valued at $34 billion) in response to China’s unfair intellectual property and market access practices. The Administration subsequently imposed tariffs on two more groups of Chinese
Effective May 10, 2019 importations of merchandise covered under the Section 301 third tranche, manufactured in China and entered into the U.S., are subject to the increase in additional duties from 10 to 25%. However, according to U.S. Customs and Border Protection updated guidance, the increased duties of 25% will not apply to goods a)
On March 5, 2019, the Office of the United States Trade Representative (“USTR”) published a notice in the Federal Register officially postponing the date on which the rate of Section 301 duties on $200 billion of Chinese goods (i.e., List 3 items) will increase from 10% to 25%.
USTR’s notice follows President Trump’s announcement of
One of the potential consequences of the U.S.-China trade dispute is that more companies may consider supply chain sourcing from third countries such as Mexico. This may include direct sourcing in the third country or the processing of Chinese components into finished products in third countries prior to entry into the United States. There are a number of issues to consider where the processing of Chinese products subject to section 301 duties occurs in third countries prior to importation in the United States.
For example, the imported Chinese components processed in a third country may nonetheless be subject to section 301 duties when imported into the United States unless they are “substantially transformed” into a new and different article of commerce in the third country. This is a product-specific analysis and involves a review of components and production steps. Recently, the Court of International Trade ruled that mere assembly of foreign component parts does not constitute substantial transformation. (Energizer Battery Inc. v. United States, 190 F. Supp. 3d 1308 (Ct. Intl. Trade 2016). The decision noted that, “whether there has been a substantial transformation depends on whether there has been a change in the name or use of the components.” The court focused not on whether “the components as imported have the form and function of the final product” but rather “whether the components have a pre-determined end-use at the time of importation.” The court suggested that the imported parts would need to undergo “further work” beyond mere assembly to be considered substantially transformed.
