Businesses Say Exclusions Good Start, Others Slam Decision

After the Office of the U.S. Trade Representative agreed to reinstate 64% of expired Section 301 tariff exclusions (see 2203230070), business interests said it should go further, while the Coalition for a Prosperous America said the decision was wrongheaded.

The 352 goods that now have exclusions again will not have to pay the 25% or 7.5% additional tariffs through the end of 2022, and the additional tariffs paid on goods that came in since Oct. 12, 2021, can be refunded if the entries are either unliquidated or within the 180-day protest period after liquidation.

It "will be interesting to see if this is the end of the road for Section 301 (China) product exclusions or not," Sidley Austin attorney Ted Murphy wrote. "The House and the Senate are working to reconcile their respective competitiveness bills .... The Senate version has provisions requiring the USTR to reinstate more product exclusions; whereas the House version does not. If the Senate version wins out, then we may see additional action related to product exclusions this summer."

However, the Senate version gives the USTR discretion not to offer more exclusions if the office determines it would undermine the trade action.

Ryan Ong, director of international business policy at the National Association of Manufacturers, tweeted, "Manufacturers welcome [USTR's] announcement reinstating a set of China 301 exclusions. Yet this is only the first step: manufacturers in the U.S. need a comprehensive, fair, transparent process allowing them to make their case for meaningful relief."

The U.S.-China Business Council went further, saying none of the tariffs should continue. The group complained that no reason was given for rejecting almost 200 formerly granted exclusions. The USCBC said that many of the goods that face higher tariffs are manufacturing inputs.

“We know that the tariffs are a tax on US businesses and consumers, that they haven’t influenced China’s behavior -- which was the purported justification -- they likely contribute to domestic inflation, and they negatively affect US companies of all sizes, especially many smaller businesses that struggle to survive after more than two years of a pandemic,” Craig Allen, USCBC president, said. “The tariffs should be eliminated. They serve no useful purpose or policy goal.”

The Coalition for a Prosperous America said a large majority of importers' exclusion requests were "without merit. Importers are required to demonstrate that their product line cannot be found in the U.S. or outside of China in order to receive an exclusion. After reviewing the petitions of fabricators (e.g., tool & die makers, foundries, mold-makers, etc.), CPA found a number of exclusion petitions that should not be granted. The products identified in these petitions can be made in the U.S. or in other countries outside of China. CPA believes strongly that the Biden administration should not grant any exclusion petition unless the importer can offer evidence that they solicited orders from custom fabricators outside of China."

“Once again, multinational importers and their army of Washington lobbyists have protected their ability to import cheap Chinese goods over sourcing from American manufacturers,” CPA Chairman Zach Mottl said. “We are disappointed that the Biden administration granted exclusions to the 301 tariffs on many Chinese products that have alternatives that are made or could be made right here in America, or are made outside of China. As China supports and enables Russia’s aggression against Ukraine, we should be decoupling rather than providing their companies revenue from U.S. consumers. We will continue to fight against those in Congress who want to use taxpayer dollars to refund importers that profit off of cheap Chinese goods, as well as efforts to weaken the 301 tariffs despite China’s continued IP theft, rampant government subsidization, use of forced labor, and violation of the Phase One trade deal.”