COVID–19 Duty Deferral Option Withdrawn by CBP Amidst Continued Requests by Congress for Such Action

After initially accepting requests from importers in light of the novel coronavirus (COVID–19) pandemic to defer payment of duties—a means of relief that the Trump Administration had reportedly been considering—US Customs and Border Protection (CBP) has issued guidance withdrawing this option.

As individuals and businesses face the growing health and economic crisis stemming from the global COVID–19 outbreak, government has searched for balanced ways to provide relief to those struggling, and trade measures are no exception. As we reported earlier, on March 20, 2020, CBP issued a Cargo Systems Messaging Service (CSMS) message that it would accept requests temporarily to defer the payment on imported goods of estimated duties, taxes, and fees, which ordinarily are due upon entry, on a case-by-case basis.

On March 26, 2020, however, CBP abruptly backtracked on the proposal, notifying the trade via CSMS that it would no longer accept requests for duty deferral on the basis of the pandemic. Earlier reports had stated, though officials have denied, that President Trump has been debating a 90-day duty deferral option for importers, while a bipartisan group of lawmakers has been pushing the Administration for various trade actions to address the economic impact of COVID–19 on Americans, including duty deferral.

On March 25, twelve Republican members of the Senate Finance Committee led by Chairman Chuck Grassley sent a letter to the Administration, writing that “a duty deferral would be a commonsense way to improve the liquidity of our businesses during this time of economic disruption.” On March 26, Senators Diane Feinstein (D-CA) and Pat Toomey (R-PA) wrote to Secretary Steven Mnuchin on behalf of five other senators and House Minority Leader Kevin McCarthy (R-CA) that “the Treasury Department should direct that all tariffs will be deferred for at least 90 days and, more broadly, until the companies paying them can emerge from the ongoing crisis.” Both letters cite the recent deferral of internal revenue tax payments.

The CBP notice reminds the trade that CBP will continue to consider deferrals in narrow circumstances, including a physical inability to file entry or make payments due to technology outages or port closures. Arent Fox will continue to monitor developments and can help companies prepare requests for duty deferral in these increasingly difficult times.

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