USTR Reinstates 352 Expired Exclusions From Section 301 Tariffs on China

Consumer tech products barely figure at all on the list of 352 exclusions from Section 301 tariffs on China that were reinstated Wednesday by the Office of the U.S. Trade Representative. Of the newly granted 352 exclusions -- about 64% of those that were "eligible" for reinstatement because they previously had been extended -- most had expired at the end of 2020, but some had lapsed by midyear 2021.

The reinstated exclusions are retroactive to Oct. 12, the date when USTR began accepting comments on the proposed exemptions, and will remain in effect through Dec. 31, said USTR's notice. The new exclusions include 89 product headings on the List 1 Section 301 tariffs, plus 34 under List 2, 187 under List 3 and 42 under List 4A, The 352 reinstated exclusions will be covered by a new Harmonized Tariff Schedule 9903.88.67 subheading. USTR "may consider further extensions as appropriate," said its notice.

"USTR considered whether or not reinstating the exclusion would impact or result in severe economic harm to the commenter or other U.S. interests," said Wednesday's notice. It also weighed the "overall impact" of the exclusions on the goal of curbing China's allegedly unfair trade practices as described in USTR's March 2018 Section 301 investigatory report.

USTR's "determination" to reinstate 352 exclusions of the 549 expired exemptions that were eligible were based on its consideration of the public comments, plus "the advice of advisory committees, the interagency Section 301 Committee, and the White House COVID–19 Response Team," said Wednesday's notice. USTR, through four Section 301 tariff rulemakings and various exclusion proceedings, has closely guarded the details of its decision-making.

The list of newly reinstated exclusions includes tracking devices imported from China under HTS 8518.22.0000 "to establish a Bluetooth connection with another device for the purposes of providing relative location information," said the notice. Also reinstated are the exclusions for wireless communication components (HTS 8518.22.0000) "that can receive audio data to be distributed to wireless speakers."

Element TV, which formerly did business under the name Element Electronics, got reinstatement of its expired tariff exclusions on the LCD modules (HTS 8524.11.9000) and LCD main board assemblies (HTS 8529.90.1300) it imports from China under the 7.5% List 4A tariffs to assemble finished TV sets in Winnsboro, South Carolina. Element has 479 employees in Winnsboro, it said in a Nov. 30 reinstatement request.

Element has "worked diligently to pursue options for sourcing its LCD panel assemblies outside of China," it said in the Nov. 30 request. "Element had identified non-Chinese suppliers that were able to supply a significant portion of Element’s demand. The largest sources of supply were Korean producers who also produced panels for major Korean TV brands. However, most of these suppliers announced in 2020 they would be ending production of LCD TV panel assembles to concentrate on producing LCD panels for other, non-TV products."

After being turned away by the Korean suppliers, "Element had to start from scratch in attempting to identify additional, non-Chinese suppliers," it said in the Nov. 30 request "This process was virtually impossible to conduct because of increased restrictions as a result of the spread of the Delta COVID-19 variant throughout Asia. Movement control orders, shipping delays, component shortages, and other supply chain issues have made it impossible to identify and qualify new suppliers outside of China that can reliably meet Element's demand for panel assemblies."

Element used to be a top U.S. TV brand by virtue of the large volume of LCD sets it sold through Costco, Walmart and other big-box retailers. Element is no longer on "the top brand list so we would not be able to report on their specific share," emailed Stephen Baker, NPD vice president-industry analysis. "They were at some point" in the top five, "certainly before TCL and Hisense entered in force," said Baker Thursday. "But obviously their strategy has changed a lot over the years." Element didn't respond Thursday to emails requesting comment.