China 301 Phase 1 and Recurrent Program Update
January 17, 2020
To our valued clients,
We recognize the challenge of remaining current with the China 301 program developments. The responsibility to remain updated with current financial obligations for imports from China regarding applicable goods subject to the additional China 301 tax has major implications to the financial responsibilities of importers managing duties due forecasting and landed cost decisions to be made by senior management professionals in the US importer trade industry sourcing from China.
We outline below the updates information resulting from the recent Phase 1 China development regarding China 301 to put into perspective facts and what impact it may or may not have on your current import profile and responsibility for additional duties to CBP.
It is important to note that if your goods are on China 301 list 1, 2 or list 3, the Phase 1 China agreement does not affect your duty rates and the 25% additional China 301,still remain in effect.
On January 15th, the United States and China signed a Phase One Economic and Trade Agreement. Under the Phase One deal, the U.S. has suspended some tariff increases (List 4B) and will roll back others (List 4A) in return for what the White House calls "structural reforms and other changes to China's economic and trade regime."
According to information from the Office of the U.S. Trade Representative, the agreement includes provisions on intellectual property, technology transfer, agriculture, currency and expanding trade. It also establishes a dispute resolution system. Find full details of the Phase One Agreement on USTR's website.
Section 301 Tariff: List 4A & List 4B
The USTR issued a Federal Register notice reducing the rate of additional tariffs on List 4A products to 7.5%, effective February 14, 2020. Goods on List 4A are currently subject to a 15% additional tariff, effective Sept. 1, 2019.
The 15% tariffs on List 4B are suspended, per a Federal Register notice issued 12/13/19.
The exclusion process for items on List 4A opened October 31, 2019 and will close January 31, 2020. Exclusion requests must be submitted through an online portal and will require a significant amount of company and product information.
Section 301 Tariff: List 3
List 3 products, with a total import value of $200 billion, are subject to an additional 25% tariff as of 5/10/19. List 3 products originally faced a 10% tariff which was effective from 9/24/18 until they were increased to 25%. The additional tariff on List 3 products is not affected by the Phase 1 deal and will remain at 25%.
The exclusion process for List 3 products is now closed. USTR granted 311 HTS exclusions from August 2019 - January 2020, some of which are product specific and others that cover entire subheadings. Additional exclusions may be granted, and all exclusions granted will be retroactive to Sept. 24, 2018, and expire August 7, 2020.
Section 301 Tariff: List 2
List 2 products, with a total import value of $16 billion, are subject to an additional 25% tariff as of Aug. 23, 2018. The additional tariff on List 2 products is not affected by the Phase 1 deal and will remain at 25%.
All exclusion requests from List 2 have been reviewed as of October 3, 2019, and 269 HTS exclusions were granted. All exclusions granted are retroactive to August 23, 2018 and remain in place for one year after the exclusion determination is published in the Federal Register.
All granted exclusions are product specific. The 269 granted exclusions cover 1,074 individual exclusion requests. 1,795 individual exclusion requests were denied.
Section 301 Tariff: List 1
List 1 products, with a total import value of $34 billion, were subject to an additional 25% tariff as of July 19, 2018. The additional tariff on List 1 products is not affected by the Phase 1 deal and will remain at 25%. All exclusion requests from List 1 have been reviewed as of October 3, 2019, and 726 HTS exclusions were granted. All exclusions granted are retroactive to July 6, 2018 and remain in place for one year after the exclusion determination is published in the Federal Register.
Some granted exclusions are product specific and others cover entire subheadings. The 726 granted exclusions cover 3,653 individual exclusion requests. 7,161 individual exclusion requests were denied. The exclusions granted in December 2018 were set to expire December 28, 2019. Some of those exclusions have been extended. The second set of exclusions are set to expire March 25, 2020. USTR is accepting public comment between January 15 and February 15 on extending those exclusions past March 25, 2020.
We remain available to assist you with any clarification or assistance in the transfer of this information to your senior management representatives upon any such request.
Rennie Alston, CEO
Phone 908 313-7605