USTR Grants First Batch of Section 301 Exclusions

The USTR reviews exclusion requests in four stages. The vast majority of requests remain pending in “Stage 2” – a substantive review by the USTR – and “Stage 3” – an administrability review by U.S. Customs and Border Protection (CBP).

In its first release of granted exclusions, the USTR issued 31 product categories a one-year exclusion from the tariffs imposed beginning on December 28, 2018 (publication of the notice). The one-year exclusion is also retroactive to July 6, 2018, the effective date of the List 1 tariffs. The granted exclusions apply to all importers of the excluded product categories and tariff codes, not just the importers who requested the exclusions.

The vast majority of products excluded fall under one of the following product categories:

1. Single-row radial bearings having an outside diameter between 9 mm and 100 mm. Single row radial bearing with a diameter under 9mm or over 100 mm have not been excluded (8482.10.5044, 8482.10.5048, and 8482.10.5052);
2. Injection or compression type molds for rubber or plastics (8480.71.80);
3. Linear-acting hydraulic engines and motors (8412.21.00);
4. Refrigerating or freezing equipment like ice making machines and drinking water coolers (8418.69.01); and
5. Thermostats for air conditioning or heating systems (9032.10.00).

The USTR also excluded seven 10-digit HTS subheadings in their entirety (HTSUS 8412.21.0075, 8418.69.0120, 8480.71.8045, 8482.10.5044, 8482.10.5048, 8482.10.5052, and 8525.60.1010). To view the Federal Register Notice with all the granted request product categories, click here. The majority of the first round of granted exclusion requested emphasized a lack of supply outside of China.

Though the USTR remains open and will continue to review filed exemptions despite the government shutdown, the granted exclusions will not go into effect until the federal government shutdown ends. Specifically, CBP will not release instructions on how to utilize the exemption and get refunds of any duties paid, nor adjust the tariffs assigned to products in the ACE system until the government reopens.

In the meantime, we recommend that importers of record impacted by the Section 301 List 1 tariffs take the following steps:

• Review your current ACE data to determine if you have imported products from China that have been excluded from the List 1 tariffs.
• If you have imported excluded products, you will be entitled to a refund on the additional 25% tariff you paid from the July 6, 2018 implementation date. You should calculate the duty amount paid and reach out to the broker that imported the goods to apply for a refund via a post summary correction (PSC).
• Reach out to your current broker importing the goods subject to the exemption for assistance in applying the exemption to future entries once the government shutdown has ended and instructions for utilizing granted exemptions are released.

The USTR will continue to announce decisions on product exclusion requests periodically. The status of filed exclusion requests can be viewed in the UTSR’s weekly Index of Product Exclusion Requests and Review Status by requester, product name, and HTS subheading.

The deadline for List 2 product exclusion requests to be filed with the USTR was December 18, 2018. Despite previous plans for the tariffs on List 3 products to increase from 10% to 25% on January 1, 2019, the USTR has confirmed Section 301 List 3 tariffs will remain at a rate of 10% until March 2, 2019 pending ongoing discussions with China. There has not yet been an exclusion process announced for products on List 3.

Arent Fox has developed a program to assist importers in navigating the Section 301 List 1, List 2, and List 3 tariffs. If you would like more information on this program or on how you can minimize the impact of the Section 301 tariffs on Chinese imports, please contact any Arent Fox trade group member listed below.