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May 18, 2022  |  Anahi Czeszewski  Product Development Manager

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U.S. Trade Representative to Review All Section 301 Tranches: What You Should Know

According to a recent announcement from the Office of the United States Trade Representative (USTR), a statutory review has been initiated leading up to the four-year anniversary of the Section 301 China tariff actions. The USTR is currently accepting requests for continuation until July 6, 2022, as part of the first action of this investigation. Find out what this could mean for your total landed cost.

Background: Section 301 China duties

Under Section 301 of the Trade Act of 1974, USTR can 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. Under the Trump administration, Section 301 actions were imposed on Chinese goods as follows:

  • Tranche 1: Implemented July 6, 2018, covering approximately $34 billion worth of Chinese imports
  • Tranche 2: Implemented August 23, 2018, covering approximately $16 billion worth of Chinese imports
  • Tranche 3: Implemented September 24, 2018, covering approximately $200 billion worth of Chinese imports
  • Tranche 4: Implemented September 1, 2019, covering approximately $120 billion worth of Chinese imports

Review process will continue, modify, or end Section 301 China tariffs

As stated in a recent Federal Register notice, the USTR will soon begin its statutory four-year review of the first two Section 301 China tariff actions, under tranche one and tranche two. As a secondary means of communication, the USTR will mail notices to all parties that had previously submitted comments on the Section 301 additional tariffs, which includes 600 stakeholders, according to a senior USTR official.

The first two Section 301 China tariff actions will terminate on their respective four-year anniversary dates (i.e., July 6, 2022, and August 23, 2022, respectively) unless a representative of a domestic industry that benefits from the respective action submits a request for continuation in the 60-day period prior to the four-year anniversary.

How do I submit a request for continuation?

Representatives of domestic industries are invited to submit their requests for continuation using USTR’s comment portal. For tranche one, requests for continuation are currently being accepted until 11:59 p.m. on July 5, 2022. The comment portal will reopen on June 24, 2022, for tranche two requests, closing at 11:59 p.m. on August 22, 2022, for that tranche.

Furthermore, as stated within the Federal Register notice:

  • Representatives of a domestic industry that benefits from either of the two actions under Section 301, as modified, may submit a request for continuation of an action through the USTR portal.
  • Representatives of a domestic industry that benefits from both trade actions under Section 301, as modified, may submit two separate requests for continuation within the two respective 60-day time periods.

What to expect during USTR’s second phase review

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 USTR receives a request, it will announce the continuation of the associated Section 301 tariff action as it undertakes a formal review.

What will USTR 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.” Thus, if the USTR receives requests for continuation, it will need to consider these criteria to make its determination.

USTR, Katherine Tai, and Deputy National Security Advisor, Daleep Singh, add comments

United States Trade Representative, Katherine Tai, recently commented that tariff cuts were “one tool” the administration may use to combat inflation. Furthermore, during an interview with Deputy National Security Adviser, Daleep Singh, comments were made regarding the possibility to “reframe” the Section 301 additional duties and to “think carefully about products that have a genuine national security nexus.”

Uncover your potential duty minimization opportunities

Use C.H. Robinson’s U.S. tariff search tool to identify potential duty minimization opportunities and to understand the impact on your business if additional tariffs are terminated by the USTR. The tool uses 10-digit tariff classification codes, as queried directly from both the United States International Trade Commission (USITC) and all duty exclusion notices published by USTR, so you can save hours of research time and gain clarity in an extraordinarily complex environment.

Take control of your total landed cost and be proactive in today’s ever-evolving trade climate. Not sure how to use the search tool? Learn how to get started with the U.S. tariff search tool in under one minute.

Are there any other duty recovery or minimization opportunities out there?

Under the Senate’s U.S. Innovation and Competition Act (USICA), there may be additional opportunities to collect refunds on Section 301 China duties you previously paid to Customs and Border Protection (CBP).

According to the bill, all previously expired duty exclusions would be reinstated from the date of passage of the legislation through December 2022.

The USICA and the America COMPETES Act—the U.S. House of Representatives’ response to the Senate’s USICA—are both under deliberation, and lawmakers will go to conference with the aim to reach a compromise on the differences between the bills before a final bill can go to President Biden’s desk for signing. Notably, the America COMPETES Act does not contain any provisions to reinstate previous duty exclusions to the Section 301 China duties.

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Subscribe to our Client Advisories and Trade and Tariff Insights to be notified when changes on these and other important topics take place. Connect with one of our trade policy experts to learn even more.

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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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USICA resources

The United States Innovation and Competition Act (USICA) was passed by the U.S. Senate in June 2021 to counter China’s growing influence in science, technology, and advanced manufacturing.

What’s included in the bill

Major components of the bill include investments in domestic manufacturing of “strategic sectors” like computer chips and PPE.

Also included is the Trade Act of 2021, which would reinstate certain exclusions to Section 301. Additionally, under USICA, importers of Generalized System of Preferences (GSP) products could be retroactively refunded for certain duties paid and no longer have to pay duties and tariffs on GSP imports until January 1, 2027, when GSP will expire again.

Additionally, USICA would renew the Miscellaneous Tariff Bill (MTB) program through December 31, 2023—and be retroactive for four months before the bill’s enactment—providing temporary tariff reductions and suspensions on certain U.S. imports.

Determine the potential impact to your business

Uncover potential duty refunds if the USICA passes into law* with our U.S. Tariff Search Tool. Instantly search by Harmonized Tariff Schedule (HTS) and estimate your retroactive duty refund amount today.

America COMPETES resources

The U.S. House of Representatives passed the America COMPETES Act in February 2022, in response to the Senate’s USICA.

What’s included in the bill

Under the America COMPETES Act, GSP products would be renewed for a shorter timeframe—until January 1, 2024. The MTB program would be renewed through approximately the same period as under USICA—through December 31, 2023.

One provision only included in this bill is the Importer Security & Fairness Act, which addresses de minimis value shipments and would prohibit certain goods—such as goods that are both non-market economies and on the U.S. Trade Representative’s (USTR) watch list from using de minimis. The current de minimis value in the United States is $800, which means one can import shipments valued at $800 or less without paying duties, taxes, or fees.

Notably, the America COMPETES Act does not contain provisions surrounding the Section 301 China tariffs.

*The USICA and America COMPETES are currently bills and have not yet become law. Aspects of the bills can change and amendments can be made. The information provided herein does not guarantee any refund and undue reliance should not be placed on it. Proper review and thorough analysis are required to determine outcome.

U.S. Tariff Search Tool

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: 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. 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, but the USTR is considering extensions of exclusions granted from Lists 1, 2, 3, and 4. 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.

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. Moreover, the USTR indicated that, in recent months, it has prioritized the review of 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. Customs and Border Protection (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 September 9, 2020, U.S. CBP has reported the following 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 exclusive guide 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 U.S. trading partners subject to the additional U.S. import restrictions have taken or announced proposed retaliations against each of the three U.S. actions. Since April 2018, a number of retaliatory tariffs have been imposed on U.S. goods accounting for $126 billion of U.S. annual exports, using 2017 export values.

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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