Trade & Tariff Insights

Stay up to date on the latest news, insights, perspectives, and resources from our customs & trade policy experts.

    This Week's Trade & Tariff Perspective

    March 2, 2021 | Kevin Doucette Director of North American Trade Policy & Compliance

    hands on a laptop keyboard 

    What is CTPAT?

    The Customs-Trade Partnership Against Terrorism (CTPAT) is the largest and most successful government-private sector partnership to emerge from the events of September 11, 2001. CTPAT was launched in November 2001, with just seven companies— of which were major importers. Today, over 11,500 companies are enrolled in the CTPAT program. These companies now represent a broad range of the supply chain, including U.S. importers, customs brokers, terminal operators, carriers, and foreign manufacturers. Since the beginning, the guiding principles for CTPAT have been voluntary participation, jointly-developed Minimum Security Criteria (MSC), and implementation of best practices.

    How has the program evolved?

    In early 2016, U.S. Customs and Border Protection (CBP) requested that the Commercial Customs Operations Advisory Committee (COAC) establish a working group to evaluate proposed updates to the MSC that had long been in place for CTPAT. After two and a half years of close collaboration with the trade community, CBP announced the updated MSC in May of 2019. The new MSC aim is to address evolving global security threats, such as cybersecurity, agricultural security, the prevention of money laundering and terrorism financing, and the expansion of security technology. Prior to the new MSC, a CTPAT member needed to address approximately 33 areas within the security profile; now most companies must address about 140 unique areas.

    With such sweeping changes in effect, is your company currently meeting—or prepared to meet—the updated MSC? Just a few key examples of questions to ask include the following:

    • Have your current suppliers and other business partners that your company nominates as part of the supply chain been evaluated in accordance with the new MSC?
    • Has an updated risk assessment been conducted to identify where security vulnerabilities may exist in your supply chains? Does this risk assessment identify threats, assess risks, and incorporate sustainable measures to mitigate vulnerabilities? Are the new CTPAT requirements specific to your company’s role in supply chain being considered?
    • Are written procedures in place for both security and agricultural inspections of Instruments of International Traffic (IIT)? What measures are in place throughout the supply chain to prevent, document, and mitigate visible pest contamination?
    • Prior to loading/stuffing/packing, do all conveyances and empty IIT undergo CTPAT-approved security and agricultural inspections to ensure their structures have not been modified to conceal contraband or have not been contaminated with visible agricultural pests?
    • Regarding cybersecurity, are policies and procedures in place to prevent attacks via social engineering?
    • Does your company have documented procedures in place regarding the installation, maintenance, and use of security technology that it utilized to secure your facilities?

    Though CTPAT continues to allow for a flexible and risk-based approach based on the specific supply chain, all CTPAT participants were expected to implement the new requirements by the end of 2019. Have you met this goal?

    How does this affect your company?

    Many current CTPAT members are overwhelmed with the amount of work required to update their security profile, procedures, and risk assessments to meet the new MSC. In light of the pandemic, many companies have also restructured their workforce and might not have the internal knowledge or expertise to manage the demands of the CTPAT program. Furthermore, companies looking to join the program may struggle with how to get their programs started.

    What can you do?

    If you are struggling with starting or updating your company’s CTPAT program, you need an action plan. I would suggest taking the following steps:

    1. Review your business partners to ascertain if they meet the MSC.
    2. Review your internal controls to determine if they align with the MSC.
    3. Review your security profile. Ensure that it correlates to current practices and meets the MSC.
    4. Review, revise, and make any necessary updates to your risk and vulnerability assessment to encompass the MSC.

    We are here to help.

    Obviously, all the above-listed actions require both time and resources. C.H. Robinson’s Trade Policy Division has helped clients bring their CTPAT programs into compliance with the new MSC, and we excel at customizing our solutions. Our CTPAT services range from ad hoc assistance, such as providing updated business partner questionnaires, to assisting with an overhaul of the client’s entire CTPAT program and procedures. Whether your company’s deadline for the annual security profile update is looming, or you are looking to apply to the CTPAT program for the first time, C.H. Robinson’s Trade Policy Division is here to assist.

    warehouse employees looking at a clipboard with freight boxes

    Have trade or tariff related questions?

    Explore all market insights

    Stay in the know with weekly trade & tariff email notifications

    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.

    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

    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

    More trade topics & resources

    Compliance checklists, on-demand webinars, and more from U.S. Customs and Border Protection.

    Trade strategies to consider

    Weigh speed, cost, capabilities, risks, and returns to determine how to keep your freight moving forward.

    Trade & Tariff News

    Read up on the latest tariff news.

    The Direct Impact of the Brexit Deal on Supply Chains
    Blog

    The Direct Impact of the Brexit Deal on Supply Chains

    January 13, 2021 | 8:00 AM EST
    How your business can take advantage of Section 301 tariff refunds
    Blog

    How your business can take advantage of Section 301 tariff refunds

    November 17, 2020 | 10:47 AM EST
    U.S. Importing and Exporting: Understanding the Basics
    Blog

    U.S. Importing and Exporting: Understanding the Basics

    October 13, 2020 | 10:30 AM EST

    Trade & Tariff FAQs

    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

    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: 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: 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: 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: 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: 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: 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 theCOVID-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: 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: Will the Section 301 (China) tariffs go away after the 2020 election?

    While we cannot be sure what either administration would do on a go-forward basis, it is unlikely that 301 duties will simply go away or go away immediately regardless of which administration is in place in January 2021.

    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: 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: 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.

    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

    Get trade & tariff solutions from C.H. Robinson

    Let our experts guide you through the current landscape. Start with a free consultation.

    Resources

    import-export cargo | Acme Case Study | C.H. Robinson
    Case Study

    How Acme Industries Developed & Executed a U.S. Import/Export Customs Compliance Program | C.H. Robinson

    man and woman at a computer discussing supply chain strategy
    Case Study

    National Tiles improves supply chain efficiency with onsite resource | C.H. Robinson

    gloabl freight/cargo shipping port
    Case Study

    Supporting a Growing Product Line from Lightweight Containers, Inc. | C.H. Robinson

    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.