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This Week's Trade & Tariff Perspective

September 28, 2022 | Ivana Gavroski Product Development Manager

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Customs and Trade: A Month in Review

Another month of customs and trade developments are behind us, and new changes to prepare for are ahead of us. These are the updates we’re following this month so you can better prepare for the months ahead.


Section 301 China Tariffs continued

The Office of the U.S. Trade Representative (USTR) recently announced that the Section 301 China Tariffs will not expire on their four-year anniversary dates and will remain in effect, subject to further review.

This announcement follows the completion of the first phase of the USTR’s statutory four-year review process in the Section 301 investigation that commenced in May of 2022. The first phase of the process resulted in 434 requests from domestic industries, domestic producers, and trade associations to continue the tariffs.

The USTR will now conduct a review of the tariffs and solicit comments from all interested persons on issues, such as the effectiveness of the tariffs in achieving the objectives of Section 301, other actions that could be taken, and the effects of the tariffs on the U.S. economy—including consumers. The next steps in the four-year review process will be set out in subsequent notices.

A timeframe for when the subsequent notices will be issued has not yet been announced by the USTR, but C.H. Robinson continues to closely monitor developments on the Section 301 China Tariffs. Subscribe to our Client Advisories and Trade and Tariff Insights to be notified when changes do take place.

U.S. Customs increases quarterly interest rates

On September 20, 2022, U.S. Customs and Border Protection (CBP) published the quarterly Internal Revenue Service interest rates used to calculate interest on overdue accounts (underpayments) and refunds (overpayments).

For the quarter beginning Oct. 1, 2022, the interest rate for overpayments will be 5 percent for corporations and 6 percent for non-corporations. The interest rate for underpayments is 6 percent for both corporations and non-corporations. The rates for both underpayments and overpayments have increased by 1 percent from the previous quarter.

Consider the impact these rate changes may have on your bottom line if you expect to owe duties to CBP or receive refunds from CBP in next quarter.

FDA biennial food facility registration begins

On October 1, 2022, the Food and Drug Administration (FDA) will open the biennial food facility registration renewal period. This year’s renewal period begins October 1, 2022, and ends December 31, 2022.

Unique to the 2022 renewal is the requirement of a Data Universal Numbering System (DUNS) number for the food facility location to be provided as part of the renewal. Previously, the FDA allowed registrants to enter “pending” in the Unique Facility Identifier (UFI) field of their registration if a DUNS number could not be obtained. However, the FDA will no longer allow this for the 2022 renewal. The FDA has also advised it is imperative that a facility DUNS number information and section two of the registration information match exactly with each other.

Failure of a food facility to submit a timely renewal can result in products being denied entry into the United States. Consider the following questions to see if this applies to your supply chain and what you need to know to register:

  1. What food facilities must register with the FDA?
    • If you are the owner, operator, or agent in charge of either a domestic or foreign facility that manufactures, processes, packs, or holds food for human or animal consumption in the United States, you are required to register with the FDA, unless an exemption applies.
  2. Why are food facilities required to register with the FDA?
    • Food facility registration helps the FDA determine the location and source of potential bioterrorism or foodborne illness outbreak incidents, and helps the agency quickly notify facilities that may be affected.
  3. Is there a fee that must be paid?
    • No, there is no fee for registration or renewal.

Prevent costly delays and renew your registration through an FDA Industry Systems account once the renewal period opens.

Upcoming changes to customs user fees

Effective October 1, 2022, U.S. Customs and Border Protection (CBP) will adjust certain customs user fees and corresponding limitations. The 18.629 percent increase comes as a result of CBP’s annual determination as to whether the fees and limitations must be adjusted to reflect inflation.

As outlined in the General Notice, some of the fees that will be changing include

  • Merchandise Processing Fee (MPF): For formal entries, the minimum will change from $27.75 to $29.66, the maximum will change from $538.40 to $575.35. The ad valorem rate of 0.3464 percent will not change.
  • Informal Entry/Release Fee: Automated and not prepared by CBP personnel (class code 311a) will change from $2.18 to $2.37.
  • Customs Broker Permit User Fee: Will change to $163.71.

Ensure you analyze your historical import data to understand the impact these changes will have on your customs landed cost and overall bottom line.

Stay informed on developments

Developments in customs and trade can seemingly occur in a moment’s notice and catch your supply chain off guard. Proactively prepare for changes by staying informed—subscribe to our Client Advisories and connect with one of our trade policy experts to learn more.


Our information is compiled from a number of sources that to the best of our knowledge are accurate and correct. It is always the intent of our company to present accurate information. C.H. Robinson accepts no liability or responsibility for the information published herein.

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Section 301: Unfair trade practices

What is it?

Section 301 of the Trade Act of 1974 — Allows the United States Trade Representative (USTR) to suspend trade agreement concessions or impose import restrictions if it determines a U.S. trading partner is violating trade agreement commitments or engaging in discriminatory or unreasonable practices that burden or restrict U.S. commerce.

Background ReportCongressional Research Service – Section 301 of the Trade Act of 1974 – August 2020

Update: May 3, 2022

Statutory review of all Section 301 tranches initiated—The Office of the United States Trade Representative (USTR) announced it would commence its statutory review of all active Section 301 tranches leading up to the four-year anniversary of the Section 301 China tariff actions. Accordingly, representatives of domestic industries were invited to submit their requests for continuation using the USTR’s comment portal.

Upon the closing of each comment period, the USTR will announce in subsequent notices whether it has received a request for continuation from a representative of a domestic industry benefiting from the tariff action. If the USTR receives a request, it will announce the continuation of the associated Section 301 tariff action as it undertakes a formal review.

As described in the statute, a review should cover “the effectiveness in achieving the objectives” of the Section 301 tariff actions. Additionally, other considerations in this review relate to “the effects of such actions on the United States economy, including consumers.” 

Update: March 23, 2022

Certain Section 301 duty exclusions reinstated—The Office of the United States Trade Representative (USTR) announced it would reinstate certain previously expired (and extended) product exclusions. Of the initial 549 eligible exclusions announced in October 2021, USTR has reinstated 352 product exclusions, retroactive to October 12, 2021, and extended through December 31, 2022.

What this means for your business—Uncover potential duty refunds using our U.S. Tariff Search Tool. Instantly search by Harmonized Tariff Schedule (HTS) and review the language within the “USTR Exclusion Extension Potential” section to determine your eligibility for retroactive duty recovery and for participation on a go-forward basis, through December 31, 2022.

Update: October 4, 2021

Reinstatement of Targeted Potential Exclusions — Following United States Trade Representative’s (USTR) announcement on October 4, 2021, the USTR has started a targeted tariff exclusion process. The agency invited public comments on whether to reinstate previously extended exclusions. Of the more than 2,200 exclusions granted, 549 were extended. Most previously expired on December 31, 2020. The USTR will evaluate, on a case-by-case basis, the possible reinstatement of each exclusion. If granted, the USTR will reinstate exclusions retroactively to October 12, 2021, and publish them in the Federal Register.

 

Section 232: National security concerns

What is it?

Section 232 of the Trade Expansion Act of 1962—Allows the president to adjust imports if the Department of Commerce finds certain products are imported in such quantities or under such circumstances as to threaten to impair U.S. national security.

Background ReportCongressional Research Service – Section 232 Investigations: Overview and Issues for Congress – August 2020

 

Section 201: Cause/threat to domestic industry

What is it?

Section 201 of the Trade Act of 1974—Allows the president to impose temporary duties and other trade measures if the U.S. International Trade Commission (ITC) determines a surge in imports is a substantial cause or threat of serious injury to a U.S. industry.

Background ReportCongressional Research Service – Section 201 of the Trade Act of 1974 – August 2018

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Trade & Tariff FAQs

Q: Are products entered under the Section 321 de minimis exemption (under $800) subject to Section 301 duties?

No, not right now. Goods properly entered under Section 321 are not subject to Section 301 duties. Please note that a formal entry is required if a shipment contains merchandise subject to AD/CVD. Goods subject to AD/CVD do not qualify for Section 321.

Something to keep an eye on: U.S. Customs and Border Protection (CBP) submitted a proposal in early September 2020 to the Office of Management and Budget that would eliminate the $800 de minimis exemption for goods subject to Section 301 tariffs. Additionally, in January 2022, the Import Security and Fairness Act was introduced to address Section 321 shipment activity. Significant changes proposed within this legislation are as follows:

Remember, Section 321, 19 USC 1321 is the statute that describes de minimis. De minimis provides admission of articles free of duty and of any tax imposed on, or by reason of importation, but the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed $800. The de minimis threshold was previously $200 but increased with the passage of the Trade Facilitation and Trade Enforcement Act (TFTEA).

Q: Can I still apply for exclusions to the Section 301 (China) tariffs?

The time window to submit new exclusion requests is now closed. While the USTR approved, on average, 35% of requests under the first two actions, the approval rates under the third and fourth actions were 5% and 7%, respectively. 3 Be sure to check in with your trusted trade advisors to see if new comment periods open.

Be aware the USTR has completed its evaluation for the potential extension of 549 specific product exclusions granted from Lists 1, 2, 3, and 4. Accordingly, in March 23, 2022, of the 549 specific product exclusions, the USTR reinstated 352 previously expired Section 301 China duty exclusions, as published in the accompanying Federal Register notice. The exclusions were retroactively applied to October 12, 2021, and made valid through December 31, 2022.

Q: If I previously paid Section 301 (China) duties, but an exclusion was later issued by the United States Trade Representative (USTR), can I get my money back?

Yes. You have the opportunity to potentially recover duties paid on previous entry activity. Your customs broker, trade attorney, or trade consultant can submit a refund request via Post Summary Correction (PSC) or Protest as long as the entry has not exceeded the liquidation date plus 180-day time period (roughly 480 days from the original entry date). Remember, your company doesn’t have to be the one that requested the exclusion in the first place. You qualify as long as your product meets the specific description of the exclusion granted by the USTR.

Q: Are products used to support the fight against COVID-19 subject to the additional Section 301 (China) tariffs?

The USTR announced on March 20, 2020, that, prior to the COVID-19 outbreak, the agency had been working with the U.S. Department of Health and Human Services “to ensure that critical medicines and other essential medical products were not subject to additional Section 301 tariffs.” Consequently, the United States had not imposed tariffs on certain critical products, such as ventilators, oxygen masks, and nebulizers.

The USTR has since reviewed requests for exclusions on medical care products, resulting in exclusions granted on basic medical supplies, including gloves, soaps, face masks, surgical drapes, and hospital gowns. Since March 2020, the USTR has exempted certain medical products from Section 301 tariffs in several rounds of exclusions. 3

Q: What is the timing of duty calculations on immediate transportation in bond entries subject to Section 301?

Duties are due on goods that are entered for consumption, or withdrawn from warehouse for consumption, on or after the effective date of the provisional tariffs. For entries covered by an entry for immediate transportation, and with a country of origin of China, and a Harmonized Tariff Schedule (HTS) classification covered by Annex A to the FRN, such entries shall be subject to the duty rates in effect when the immediate transportation entry was accepted at the port of original importation, pursuant to 19 CFR 141.69 (b), which states:

Merchandise which is not subject to a quantitative or tariff-rate quota and which is covered by an entry for immediate transportation made at the port of original importation, if entered for consumption at the port designated by the consignee or his agent in such transportation entry without having been taken into custody by the port director for general order under section 490, Tariff Act of 1930, as amended (19 U.S.C. 1490), shall be subject to the rates in effect when the immediate transportation entry was accepted at the port of original importation.

Q: How much has the U.S. government collected from the various trade remedy measures?

U.S. CBP assesses and collects duties on U.S. imports, including the additional duties imposed as a result of the president’s tariff actions. As of April 27, 2022 U.S. CBP has reported these duty assessments.

Q: Are products of Hong Kong subject to the additional Section 301 duties against China?

No. Additional duties imposed by the Section 301 remedy only apply to articles that are products of the People’s Republic of China (ISO Country Code CN). Imported goods that are legitimately the product of Hong Kong (HK) or Macau (MO) are not subject to the additional Section 301 duties. Please note that Section 301 duties are based on country of origin, not country of export. 2

Q: What are various types of import restrictions that can be imposed by the government?

Tariffs – A tax on imports of foreign goods paid by the importer. Ad valorem tariffs are assessed as a percentage of the value of the import (e.g., a tax of 25% on the value of an imported truck). Specific tariffs are assessed at a fixed rate based on the quantity of the import (e.g. 7.7% per kilogram of imported almonds), and are most common on agricultural imports.

Quotas – A restriction on the total allowable amount of imports based either on the quantity or value of goods imported. Quotas are in place on a limited number of U.S. imports, mostly agricultural commodities, in part due to past trade agreements to remove and prohibit them.

Tariff-Rate Quota (TRQ) –TRQs involve a two-tiered tariff scheme in which the tariff rate changes depending on the level of imports. Below a specific value or quantity of imports, a lower tariff rate applies. Once this threshold is reached, all additional imports face a higher, sometimes prohibitive, tariff rate.

Q: Does U.S. Customs and Border Protection (CBP) pay interest when refunding duties previously paid?

Yes! CBP does pay interest from the date the original money was deposited. The current interest rates are published in the Federal Register on a quarterly basis. Review the most recent Federal Register Notice for the latest rates.

Q: How do I find out if my product is subject to Section 301 tariff duties?

Enter the product’s harmonized tariff schedule (HTS) classification on the USTR website. In addition, you can refer to our U.S. tariff search tool to quickly search both the Section 301 tariff lists, but also identify if there are any exclusion opportunities. Talk to your Trusted Advisor® expert at C.H. Robinson to learn more.

Q: Do Section 301 (China) duties still apply if I ship goods to another country, such as Canada or Mexico, and have them packaged there before entering the commerce of the United States?

Yes. Basic changes/processes such as packaging, cleaning, and sorting would not change the country of origin to be declared in most cases. The origin would still be China and therefore the Section 301 duties would still apply.

Q: Are Section 301 duties eligible for drawback?

As noted in CSMS Message 18-000419, Section 301 duties are eligible for duty drawback. Drawback is the refund of certain duties, internal revenue taxes, and certain fees collected upon the importation of goods. Such refunds are only allowed upon the exportation or destruction of goods under U.S. Customs and Border Protection supervision.

Q: Have U.S. trading partners taken or proposed retaliatory trade actions?

Yes. Some United States’ trading partners subject to the additional United States import restrictions have taken or announced proposed retaliations against each of the three United States actions. The International Trade Administration published an article regarding retaliatory tariffs implemented by United States’ trading partners.

Q: What is a tariff?

Tariffs or duties are taxes assessed on imports of foreign goods, paid by the importer to the U.S. government, and collected by U.S. Customs and Border Protection (CBP). Current U.S. tariff rates may be found in the Harmonized Tariff Schedule (HTS) maintained by the U.S. International Trade Commission (ITC). The U.S. Constitution grants Congress the sole authority to regulate foreign commerce and therefore impose tariffs, but, through various trade laws, Congress has delegated authority to the president to modify tariffs and other trade restrictions under certain circumstances. 1

References

  1. Congressional Research Service – Trump Administration Tariff Actions (Sections 201, 232, and 301): FAQs
  2. Section 301 Trade Remedies Frequently Asked Questions
  3. Congressional Research Service - Section 301: Tariff Exclusions on U.S. Imports from China

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All content and materials discussed herein are for informational purposes only and do not constitute legal advice. You should always independently check the related Code of Federal Regulations (CFR) and, if needed, consult with the applicable Federal Agency (e.g. CBP, USTR) and/or external counsel where any question or doubt exists. Information on this site is the property of C.H. Robinson. Any transmission or use without C.H. Robinson’s permission and approval is not allowed or authorized.