MTB Signing Marks Win for Importers, Though Section 301 Tariffs Still Apply

The Miscellaneous Tariff Bill became law Sept. 13 with the signature of the president, the White House announced on Sept. 13. The tariff rate reductions on nearly 1,700 items will take effect Oct. 13 -- 30 days after enactment. The reductions, which will last through the end of 2020, only affect the Most Favored Nation rate and not Section 301 tariffs. The International Trade Commission developed the list, and most of the items are intermediate goods, but some are consumer goods that are not produced in the U.S.

There are nearly 150 items covered by the MTB that are subject to additional 25 percent tariffs under the Section 301 tariffs currently in place, according to House Ways and Means Trade Subcommittee ranking member Bill Pascrell. “For the list of proposed goods valued at $200 billion in Chinese imports that the Administration is currently considering subjecting to additional tariffs, the overlap with today’s bill could be as high as one thousand products," he said.

Somewhere around half of the MTB goods can be imported from China and many of those goods have been named as part of the Section 301 tariffs, said John Brew, an attorney at Crowell & Moring, in an email. While the MTB is welcome news for many importers, "if you receive MTB benefits, you still will be subject to China 301 tariffs unless you obtain a product specific exclusion," he said. The "MTB would still eliminate/reduce tariffs, but then the 301 tariffs would be additive," an industry executive said. For example, if an MFN tariff is 5 percent and the MTB reduces the tariff down to 2.4 percent, then a 10 percent Section 301 tariff would increase the tariff rate to 12.4 percent, he said.

Brew said he isn't aware of any MTB overlap with the Section 232 tariffs on aluminum and steel or Section 201 trade remedies on washers and solar cells. That's not surprising because "232 and 201 are cases to protect domestic industries, and MTB covers products (input materials and goods) not made in the US (the ITC and Commerce vetted and confirmed there was no US production of MTB products before making final MTB lists)."

The Coalition for a Prosperous America, which had hoped for a veto of MTB, believes that's the wrong way to look at it. "The bill cedes, forever, many of the industries we’ve lost because it zeros out import tariffs for them," CPA President Michael Stumo said. "CPA will be active in the future to prevent renewal of MTB or to reduce its scope to products that the US can never be competitive making." The ITC must begin accepting requests for items to be included in the next MTB by Oct. 15, 2019, almost exactly a year after this MTB takes effect, according to an ITC notice.

National Association of Manufacturers CEO Jay Timmons lauded the return of the program, which expired in 2012. "With his signature, President Trump has freed manufacturers and other businesses from a pointless $1 million a day tax," he said in a news release. American Apparel and Footwear Association CEO Rick Helfenbein said in a statement his group is also pleased. "With the apparel and footwear industry representing six percent of all imports to the U.S. but currently paying 51 percent of the duties collected by the U.S. government, this relief is much needed," he said. The American Chemistry Council also issued a statement in support of the new law.