Recent Trade & Tariff Perspectives

September 1, 2021 | Kevin Koch Senior Manager, Product Development

Section 301 Duty Exclusions: Extensions Possible for Those Importing Medical/Covid Response Products

Last week, the office of the U.S. Trade Representative (USTR) said they will consider continued Section 301 tariff exclusions for certain medical goods used in the fight against Covid-19. Taking advantage of these duty exclusions helps shippers avoid paying an additional 7.5% to 25% in additional duties. While these duty exclusions are set to expire at the end of September, the USTR is requesting public comments on whether to extend the deadline for up to six months.

What duty exclusions remain in place today?

Since the middle of 2018, the USTR has imposed additional duties on products from China in four tranches. However, the USTR also created a process where U.S. stakeholders could request the exclusion of certain products subject to punitive tariff actions.

Figure 1: Composition by Import Value of Five Broad End-Use Product Types Covered by Each List of Tariffs on Imports from China under Section 301 of the Trade Act of 1974

Percentage

Source: GAO analysis of Federal Register notices and data from the U.S. Census Bureau and the Office of the USTR | GAO-21-506

In March 2020, the USTR requested public comments on the possible removal of Section 301 duties from additional medical-care products. Then, in December 2020, the USTR announced extensions of 80 product exclusions on medical-care and/or Covid response products, made further modifications to 19 product exclusions, and stated it might consider further extensions as appropriate. Finally, in March of 2021, the USTR announced the extension of 99 exclusions until the end of September 2021.

Figure 9: USTR's Grant and Denial Rate for Exclusion Requests for Each List of Section 301 Tariffs on Products from China

Number (in thousands)

Source: GAO analysis of the Office of the USTR | GAO-21-506

While 13% of all exclusion requests were granted across the four tranches—excluding about $71 billion of cargo between July 2018 and December 2020—now only the current 99 duty exclusions for medical products remain. All the other exclusions previously granted expired on December 31, 2020.

Currently, the Biden administration remains quiet regarding the future of the Section 301 tariffs, the possibility of a new exclusions request process, and exclusions that were previously granted but have now expired.

If you import medical or Covid-response products, it is recommended that you take advantage of this open comment period to potentially avoid additional tariffs for several months.

Where do we go from here?

The USTR released a notice in the Federal Register on August 27, 2021, requesting comments for certain product exclusions related to Covid-19. The notice said, "In light of developments in the production capacity of the United States in the continuing efforts in the battle against Covid-19, the USTR is requesting public comments on whether to extend particular exclusions past the deadline."

If you want to submit comments to extend particular product exclusions, the website is now live. All comments must be submitted through this online portal, and the deadline for consideration is September 27, 2021, at 11:59 p.m. ET.

The USTR will evaluate each exclusion on a case-by-case basis, examining whether it remains appropriate to exclude certain products from the Section 301 duties considering the changing circumstances of the pandemic. In addition, the USTR will examine the impact of maintaining or removing the product exclusions with "the goal of obtaining elimination of China’s acts, policies, and practices covered in this Section 301 investigation."

The 99 duty exclusions can be found in the A, B, C, and D annexes of the December 2020 Federal Register notice.

How can C.H. Robinson help?

With the power of Navisphere Insight® analytics, our customers can quickly identify their tariff classification history to see if they previously imported products covered under any of these duty exclusions. In addition, you can also determine how renewal or expiration of these exclusions will impact your landed costs. Connect with one of our trade policy experts to learn more.