China Tariff Exclusion Reviews Accelerate as Denials Continue to Outpace Approvals

Monday, April 08, 2019

Sandler, Travis & Rosenberg Trade Report

The Trump administration has denied hundreds more requests for exclusions from the additional tariffs it has imposed on imports from China but has approved additional requests as well, according to information made available by the Office of the U.S. Trade Representative. Most such requests are still under consideration but USTR is making progress in conducting its reviews.

Importers should be aware that approved exclusions are available for any product that meets the specific product description, regardless of whether the importer filed an exclusion request. In addition, the scope of each exclusion is governed by the scope of the 10-digit subheading or the specific product description to which it applies, not by the product descriptions set out in any particular request. Sandler, Travis & Rosenberg can help companies understand whether their products are among those that have been excluded from these tariffs.

Background. Following a Section 301 determination that China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, the Trump administration has levied higher tariffs on Chinese goods in stages. The first phase imposed a 25 percent additional tariff on $34 billion worth of imports as of July 6, and exclusion requests were due by Oct. 9. The administration extended that tariff to another $16 billion worth of goods as of Aug. 23 and accepted exclusion requests through Dec. 18.

A ten percent additional tariff was imposed on so-called List 3 goods (valued at about $200 billion) as of Sept. 24. A scheduled March 2 increase in this tariff to 25 percent has been indefinitely postponed. Administration officials have said they will not provide any exclusion request process for these goods unless that increase occurs, although Congress has directed USTR to create such a process. The White House has also warned of an as-yet-unspecified tariff hike on an additional $267 billion worth of Chinese goods if Beijing “takes retaliatory action against our farmers or other industries.”

(Click here for more detailed information on affected products and other aspects of the Section 301 process.)

Update on Exclusions. Information from USTR indicates that as of March 29 nearly 11,000 exclusion requests had been submitted for List 1 goods. USTR has denied 5,311 of these requests (up from 4,535 a month earlier) and granted 1,091 (up from 984; click here for a full list of approved exclusions).

The remainder of the List 1 requests are listed as being at one of four stages. Of these, 1,133 are undergoing an initial review of whether the request should be granted based on specified criteria (down from 2,075), and 3,299 are being reviewed with U.S. Customs and Border Protection to determine whether the exclusion would be administrable (up from 3,226). None are currently in the first stage, in which comments are accepted, or the final stage, in which the exclusion has been granted and is being prepared for publication in the Federal Register.

USTR has also received 2,931 exclusion requests for List 2 goods. Of these, 1,790 are undergoing substantive review (down from 2,921) and 1,141 (up from zero) are being reviewed for administrability. None are currently listed as having been approved or denied or as being in either the first or final stage.

For more information on Section 301 tariffs, including exclusion requests, please contact Nicole Bivens Collinson at (202) 730-4956 or Kristen Smith at (202) 730-4965.

© 2019, Sandler, Travis & Rosenberg, P.A. Originally published in the 04/08/19 issue of the Sandler, Travis & Rosenberg Trade Report. Reprinted by permission.

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