The Office of the U.S. Trade Representative is publishing two new sets of product exclusions from the 25 percent Section 301 tariffs on goods from China (see 1909300009). The product exclusions apply retroactively to when each tranche initially took effect. That was July 6, 2018, for the first tranche, and Aug. 23, 2018, for the second tranche.
Section 301 Tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump Administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump Administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions—particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Almost three quarters of U.S. imports from China were subject to Section 301 tariffs, which ranged from 15% to 25%. The U.S. and China engaged in negotiations resulting in the “U.S.-China Phase One Trade Agreement”, signed in January 2020.
The Biden Administration took steps in 2021 to eliminate foreign policies subject to Section 301 investigations. The administration has extended and reinstated many of the tariffs enacted during the Trump administration but is conducting a review of all Section 301 actions against China.
The Office of the U.S. Trade Representative issued two new sets of product exclusions from the 25 percent Section 301 tariffs on goods from China. The exclusions include products from the first two lists of Section 301 goods. The new exclusions from the first tranche include "92 specially prepared product descriptions" and cover 129 separate requests, according to the notice. The second tranche exclusions include 111 product descriptions and covers 382 requests, the agency said.
Football fans will “need to be aware” this fall that Section 301 tariffs ranging from 15 percent to 30 percent on Chinese goods “will drive up the price of everything from footballs and TVs to portable grills and fanwear,” the National Retail Federation blogged on Sept. 30. “Fans who prefer to watch the game from the comfort of their couch won’t be spared,” NRF said. Overall, “Americans would pay $711 million more than they otherwise would for ... [televisions] hit with 25 percent tariffs,” it said, citing a Trade Partnership report it commissioned in June. Tariffs of 15 percent took effect Sept. 1 on finished TVs from China, among other goods on List 4A. “Think of these tariffs as 15- to 30-yard penalties between you and the goal of a fun weekend afternoon with your favorite team,” NRF said. “As you take a break during halftime, take a moment to tell Congress to end the trade war and remove all tariffs.”
CBP will add the ability in ACE for importers to file entries with the seventh group of exclusions from the first tranche of Section 301 tariffs on Sept. 29, it said in a CSMS message. Filers of imported products that were granted an exclusion (see 1909180013) should report the regular Chapter 84, 85, 87, 88 or 90 Harmonized Tariff Schedule number, as well as subheading 9903.88.14, for products subject to Section 301 duties on products from China but that have been granted an exclusion by the Office of the U.S. Trade Representative. “Importers shall not submit the corresponding Chapter 99 HTS number for the Section 301 duties when HTS 9903.88.14 is submitted,” CBP said.
CBP will add the ability in ACE for importers to file entries with the second group of excluded goods from the third tranche of Section 301 tariffs on Sept 29, it said in a CSMS message. Filers of imported products that were granted an exclusion (see 1909180004) should report the regular Chapters 38, 39, 40, 42, 44, 46, 48, 54, 55, 59, 73, 76, 83, 84, 85, 87 and 94 Harmonized Tariff Schedule number, as well as subheading 9903.88.18, for products subject to Section 301 duties on products from China but that have been granted an exclusion by the Office of the U.S. Trade Representative. “Importers shall not submit the corresponding Chapter 99 HTS number for the Section 301 duties when HTS 9903.88.18 is submitted,” CBP said.
A coalition of U.S. manufacturers seeks the imposition of new antidumping and countervailing duties on glass containers from China, it said in a petition filed with the Commerce Department and the International Trade Commission Sept. 24. Commerce will now decide whether to begin AD/CVD investigations, which could result in the imposition of permanent AD/CV duty orders and the assessment of AD and CV duties on importers.
The CBP Base Metals Center of Excellence and Expertise is overseeing a huge increase in the number of Post Summary Correction requests for retroactive application of Section 232 exclusions, agency officials recently told the American Institute for International Steel. "The Base Metals Center PSC workload has increased approximately 1500% from pre Section 232," AIIS said. As a result of that volume, "[w]hen exclusions are claimed retroactively by PSC, some time may be required to process," the trade group said.
The Office of the U.S. Trade Representative issued three new sets of product exclusions from the 25 percent Section 301 tariffs on goods from China. The exclusions include products from the first three lists of Section 301 goods. The new exclusions from the first tranche include "310 specially prepared product descriptions" and cover 724 separate requests, according to the notice. The second tranche exclusions include 89 product descriptions and covers 400 requests, while the third tranche exclusions include 38 product descriptions that cover 46 exclusion requests, the agency said.
The Office of the U.S. Trade Representative is publishing three new sets of product exclusions from the 25 percent Section 301 tariffs on goods from China (see 1909180004). The product exclusions apply retroactively to when each tranche initially took effect. That was July 6, 2018, for the first tranche, Aug. 23, 2018, for the second tranche and Sept. 24, 2018, for the third tranche. The notice for the third tranche also includes "technical amendments" to lists three and four of the Section 301 tariffs that appear to end double counting of Section 301 tariffs on goods tariffed at a rate that comes from another subheading.
S&P Global Ratings is “fairly confident” that tech manufacturers Flex and Jabil “could manage their metrics to preserve” their current “BBB-“ ratings if the List 4 Section 301 tariffs stay at 15 percent, the financial analytics firm said Sept. 13. But in a 30 percent tariff “scenario,” as the first three tariff rounds are scheduled to rise to Oct. 15, the potential EBITDA declines “could prove to be too severe” for either company to avoid a ratings downgrade, S&P said. "Flex and Jabil could be the canaries in the coal mine when it comes to the effects of another round of tariffs on the technology hardware sector," S&P said in a news release. Before any downgrade, “we would consider each company's tariff mitigation and balance sheet management strategies,” it said. “If we believed credit metrics were likely to exceed our downgrade thresholds over a 24 month period, we could lower the ratings.” It estimates that goods representing 6 percent to 9 percent of Flex's revenues and 12 percent to 17 percent of Jabil's sales will have exposure to the four rounds of tariffs, it said. “Neither company discloses these figures so we estimated them based on a review of revenue by geography for each of the customers they name in their annual reports,” it said. Jabil’s largest customer, Apple, draws 37 percent of its revenue from U.S. sales, it said. For Flex, the largest customer is Ford, which draws 61 percent of revenue from the U.S., it said. In fiscal 2019 ended March 31, 25 percent of Flex revenue came from manufacturing operations in China, it said. It estimates that Jabil derives 40 percent to 50 percent of its revenue from Chinese production, it said. Flex and Jabil didn’t comment.