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This Week's Trade & Tariff Perspective
June 22, 2022 | Alyson Brinkman Senior Manager Compliance
Customs May Not Be the Only One Interested in Your Freight
Importers understand their shipments must be cleared through U.S. Customs and Border Protection (CBP) so that CBP can perform safeguard assessments, prevent unsafe imports, and collect duties and taxes. What might not be obvious—one or more additional Partner Government Agencies (PGAs) may also regulate the commodity to ensure safety, compliance, and U.S. standards.
What is a Partner Government Agency (PGA)?
A PGA is another governmental agency that regulates imports and exports of goods into the United States. It works in conjunction with CBP and often requires the reporting of key data elements at the time of the customs entry to ensure regulatory requirements are met in order to enter commerce.
Many commodities require licenses, permits, and certifications that must be obtained from these PGAs prior to shipping. Otherwise, goods can be held or rejected upon entry into the United States. Since commodities can have one or more PGAs that regulate them, importers must do their due diligence to validate those requirements, and apply for the necessary licenses and permits, as applicable, prior to importation.
Who are the PGAs?
There are more than 20 different PGAs that may regulate specific imported commodities, but here are some of the most common ones that importers encounter.
The Food and Drug Administration (FDA)
Did you know that toothpaste containing fluoride is considered both a cosmetic and a drug by the FDA? The FDA regulates a wide variety of products, including:
- Human and animal food for consumption, including dietary supplements, food contact services, and food and color additives. The FDA does not regulate some meat, poultry, and egg products as those are regulated by USDA.
- Human and veterinary pharmaceutical ingredients, prescription, and over-the-counter drugs.
- Medical devices ranging from contact lenses and bandages to surgical and dental instruments and pacemakers.
- Radiation-emitting products like LED lights, laser pointers, X-ray machines, and microwave ovens.
- Cosmetics including shampoo, make-up, eyelash extensions, and nail polish.
- Tobacco products including cigarettes, e-cigarettes, cigars, and other tobacco products.
- Vaccines, human blood and blood screening tests, and biologics.
It is possible for some commodities to fall into two distinct categories and must comply with both, just like toothpaste with fluoride. Fluoride’s intended use is to prevent cavities, and toothpaste without fluoride is considered a cosmetic. However, when imported together, they must meet the FDA requirements for both categories.
Importers must also be mindful on how they promote the intended use of their product. If a good is being promoted for therapeutic use, it may be considered a drug or even a medical device. Marketing of these goods is an essential piece on how the FDA determines the intended use of a good. That bottle of lavender, essential oil guaranteeing a restful night’s sleep meets the FDA’s definition of a drug and is subject to FDA approval and regulations.
Additional information on the FDA’s import process and regulated products can be found at FDA Import Program.
U.S. Department of Agriculture (USDA)
USDA monitors the importation and exportation of agricultural goods to ensure quality and safety, as well as monitoring imports into the United States to ensure the cargo is free from pests that can be invasive on U.S. soil. USDA also establishes the annual, tariff-rate quota volumes for imported sugar and dairy products.
There are several subdivisions of the USDA that focus on specific areas of regulated commodities:
- Agriculture Marketing Service monitors specific fruit, vegetable, and specialty crop imports into the United States. Commodities such as avocados, grapefruit, grapes, onions, and walnuts must adhere to the special data entry and inspection requirements to ensure the quality of the imported crops. The USDA Agriculture Marketing Service website provides a full list of monitored specialty crops and requirements for importation.
- Animal and Plant Health Inspection Service—Core regulates imports and exports of plant and plant products, animals and animal products, organisms, and soil. The goal is to safeguard the U.S.’s agricultural resources and prevent the spread of animal and plant diseases. Many commodities require certifications or permits to be imported or exported. Additional information can be found on the USDA APHIS Import and Export website.
- Animal and Plant Health Inspection Service—Lacey Act requires importers whose products contain plant materials to declare specific information related to plant material incorporated into the goods. The Lacey Act’s goal is to combat illegal harvesting or trade of plants and plant products. Importers must declare the specific plant names, country of harvest, and quantity of plant material in the shipment, among other essential data. To find out more about the Lacey Act and commodities requiring declarations, go to the USDA APHIS Lacey Act website.
- Food Safety and Inspection Service is responsible for monitoring and regulating imported and exported meat, poultry, and egg products. The USDA FSIS webpage provides further details for importing and exporting these commodities.
The Environmental Protection Agency (EPA)
The EPA regulates goods to protect both human health and the environment. It regulates certain chemical substances, ozone depleting substances, vehicles and engine emissions, pesticides, and devices as detailed on the EPA Importing and Exporting website.
- Pesticides and devices: Pesticides, insecticides, fungicides, herbicides, and devices thereof, are regulated and monitored by the EPA. Special labeling requirements and advance notification of importation (Notice of Arrival EPA form 3540-1) of these commodities is required, and all pesticides and devices must be manufactured in an EPA-registered establishment. More information can be found at EPA Importing and Exporting Pesticides and Devices.
- Vehicles and Engines: The EPA regulates motor vehicles, and road and nonroad engines, to ensure they meet the EPA emission standards and requirements. This includes recreational vehicles, dirt bikes, snowmobiles, as well as generators, lawnmowers, and watercraft. Import procedures and certification requirements can be found at EPA Importing Vehicles and Engines.
- Toxic Substances Control Act (TSCA): TSCA requires the reporting, recordkeeping, and testing of certain chemical substances and mixtures. In addition to chemicals and chemical mixtures, TSCA also regulates formaldehyde emission standards in composite wood products. More information can be found on the EPA TSCA Import and Export Requirements page.
Fish and Wildlife Service (FWS)
What do alligator leather belts, live cuttle fish, mother-of-pearl buttons, and squirrel hair paintbrushes have in common? All of them are regulated by FWS.
FWS regulates far more than game animals and fish, goods manufactured from wildlife are also regulated. Several other industries including textiles and apparel, home décor and other goods, and jewelry—all must ensure if they have products made from wildlife, those products will likely need to comply with FWS regulations as well.
Importers and exporters must obtain a FWS permit and submit a FWS form 3-177 at time of entry. It is also important to note that FWS regulated goods can only be cleared through designated FWS ports of entry. More information can be found on the FWS Commercial Wildlife Shipments page.
Consumer Product Safety Commission (CPSC)
CPSC is one of the latest PGAs to start using Automated Commercial Environment (ACE) capabilities for monitoring imported consumer products and preventing noncompliant and hazardous goods from entering the United States. Working in conjunction with CBP, CPSC regulates a wide range of commodities, including but not limited to:
- Sleepwear
- Children’s products—toys, baby carriages, clothing, cribs, pacifiers, etc.
- Drywall
- Mattresses
- Art sets
- ATVs and other off-road vehicles
- Rugs
- Fireworks
The CPSC Imports website provides extensive resources for importers to determine if their imported commodities have specific standards and mandatory testing and certification requirements prior to importation.
National Highway Traffic Safety Administration (NHTSA)
NHTSA regulates the importation of vehicles, engines and other parts, and equipment to ensure that the imported goods conform to U.S. safety standards. This includes tires, head lamps, seatbelts, and child car seats. NHTSA also monitors temporary importation of vehicles, as well as non-conforming vehicles, imported into the United States. More information is available at NHTSA Importing Vehicles.
How do you know if your goods are regulated by one or more PGAs?
Eyelash extensions are regulated by the FDA as a cosmetic, but if they are made from the hair of a mink, FWS regulations also apply. So how does an importer know what is regulated and by whom?
Importers must be keenly aware of the product specifications, what inputs are in the products, the intended use, and how they are being marketed to ensure they can provide the best information possible to determine which PGAs are required.
Many commodities are explicitly regulated and will always require reporting along with any licensing or permits. Additionally, importers can use the different tools and resources available from the PGAs themselves to determine if licenses, permits, or other requirements are needed prior to importation.
Importers will also need to provide their customs brokers the information needed to complete the data entry within the timeframes required by the PGA. Some PGAs require advance notice of importation, while others only require it at time of customs entry. Understanding the process and what information is needed in advance is critical in preventing delays in the clearance process or even enforcement actions because of non-compliance.
Next steps
Importers should work with their customs broker, engage with specific PGA consulting services, or participate with industry trade groups that can assist with determining which of their commodities could be potentially regulated. 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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Trade & Tariff Resources
Get the latest news regarding tariffs and trade that can impact your business. We break down the variables of recent changes into simple, effective summaries you can use to better understand the ever-changing and often complicated trade policy and enforcement environment.
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 Report—Congressional 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.
How does it affect trade?
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 Report — Congressional Research Service – Section 232 Investigations: Overview and Issues for Congress – August 2020
How does it affect trade?
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 Report—Congressional Research Service – Section 201 of the Trade Act of 1974 – August 2018
How does it affect trade?
Incoterms® Tool
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PARS Tracker/Rapid Lookup Service
The Pre-Arrival Review System (PARS) Tracker lets truckload and LTL carriers moving freight from the United States to Canada search for a PARS number—a way to confirm that C.H. Robinson has submitted an entry for release of the cargo from the Canada Border Services Agency (CBSA) and that the entry has been accepted by CBSA. Once an entry has been accepted by CBSA, the carrier may proceed to the border for final processing and crossing into Canada.
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PAPS Tracker
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Canadian Logistics Forms and Links
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Canadian Exchange Rate
This interactive database allows you to view the international customs exchange rates to and from the Canadian dollar for the past year. This can be useful in projecting the cost of shipments to and from various countries.
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More trade topics & resources
Compliance checklists, on-demand webinars, and more from U.S. Customs and Border Protection.
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How your business can take advantage of Section 301 tariff refunds
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:
- Reverses Congress’s decision to raise the threshold to $800 from the previous threshold of $200
- Prohibits goods from countries that are both non-market economies and on the United States Trade Representative’s (USTR) Watch List from using de minimis benefits
- Prohibits goods subject to enforcement actions (e.g., Section 301 tariff measures) from using the program
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
- Congressional Research Service – Trump Administration Tariff Actions (Sections 201, 232, and 301): FAQs
- Section 301 Trade Remedies Frequently Asked Questions
- 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.