Recent Trade & Tariff Perspectives

October 20, 2021 | Anahi Czeszewski Trade Policy Advisor

Navigating the United States-China Trade War Tariffs

The United States Trade Representative (USTR) said that the Biden Administration intends to conduct an in-depth review of China’s performance under the Phase One Agreement as part of its overarching vision to realign the United States’ trade policy. In addition, the USTR started a targeted tariff exclusion process and stated that they will keep open the potential for additional exclusion processes in the future.

What does all of this mean? Read on to learn about the upcoming opportunities available that you need to be aware of, and potentially act upon quickly, in order to take advantage of duty exclusions from China trade war tariffs.

Which duty exclusions will the USTR review?

The USTR, as published within the Federal Register notice, intends to evaluate the 549 specific product exclusions—on a case-by-case basis—with the possibility of granting extensions. Most of these product exclusions expired as of December 31, 2020.

The primary focus for reinstating each exclusion relates to whether each specific product is currently available only from China. Commenters are thereby instructed to address the following:

• Is the product, and/or a comparable product, available from sources in the United States and/or in third countries?
• Have there been any changes in the global supply chain since September 2018, with respect to the product or any other relevant industry developments?
• Have there been any efforts by importers or U.S. purchasers since September 2018, to source the product from the United States or third countries?
• What is the domestic capacity for producing the product in the United States?

In addition, the USTR will consider whether reinstating the exclusion will impact or result in severe economic harm to the commenter or other U.S. interests—including the impact on small businesses, employment, manufacturing output, and critical supply chains in the United States. The overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies, and practices covered in the Section 301 investigation is also under consideration.

How does this impact the import trade community?

Understanding that there is still significant work to do on the path towards realigning the United States – China trade relationship, the key takeaway that Ambassador Tai made is that the trade measures currently in effect (the additional 7.5% to 25% duties) do not appear to be going away anytime soon. In fact, Tai said that it is the Administration’s objective to explore all options and means to continue enforcing a significant trade reform in its path forward.

There are approaches that your company can take to navigate the trade environment and better understand your true landed cost. For instance, be proactive in this seemingly ever-changing trade environment, by using some of the following tools at your disposal.

How do I submit a comment to reinstate the exclusion for my product or block one that may negatively impact my company?

Review your eligibility for the 549 product exclusions and understand the specific product descriptions. If your products match one of these exclusions, the public docket will be open for just fifty days, so ensure you allocate enough time to gather the required details.

Submit your comment with the necessary supporting rationale. You can expect a high level of scrutiny by the USTR during the in-depth review, so it’s crucial you provide the required information by the December 1, 2021 deadline. Consult with your trade attorney, as necessary.

How can the U.S. Innovation and Competition Act (USICA) affect tariff exclusions?

The U.S. Innovation and Competition Act (USICA) was passed through the Senate on June 8, 2021, and has made its way to the House of Representatives. Notably, the USICA addresses Section 301 China duty exclusions. If the USICA is passed by the House, and subsequently signed by the President, it can largely impact the import trade community.

In particular, all previous duty exclusions would be reinstated from the date of passage of the legislation through December 2022. Moreover, according to the bill, the specific duty exclusions that expired on December 31, 2020, would be retroactively reinstated between January 1, 2021, and the date of passage.

Am I eligible for duty refunds and/or duty exclusions?

Under USICA, there may be potential to collect refunds on duties you previously paid to U.S. Customs and Border Protection, and you could potentially benefit going forward from Section 301 duty exclusions.

Understanding that approximately two-thirds of Chinese products are currently subject to additional duties ranging from 7.5% to 25% and likely affecting most of the import trade community, ensure that you are well positioned to take advantage of these possible reinstated exclusions if and when the legislation becomes law. Please note, though, that duties would be refunded without interest.

How can C.H. Robinson help?

C.H. Robinson’s team of knowledgeable Trusted Advisor® experts can assist you with reviewing the options to effectively navigate these events. Connect with one of our trade policy experts to learn more.

Additional Resources

• A Conversation with Ambassador Katherine Tai, U.S. Trade Representative | Center for Strategic and International Studies (csis.org)
• USTR Requests Comments on Reinstatement of Targeted Potential Exclusions of Products of China Subject to Section 301 Tariffs | United States Trade Representative
• Federal Register: Request for Comments on the Possible Reinstatement of Certain Exclusions in the Section 301 Investigation of China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation
• Index of 549 Previously Extended Exclusions.pdf (ustr.gov)