On May 17, 2019, the United States Trade Representative (USTR) published a new proposed list of Chinese origin products that would be subject to additional import tariffs under Section 301 of the Trade Act of 1974.1 This is the fourth list reflecting products with approximately $300 billion in annual import value that could be subject to additional duties at an ad valorem duty rate of up to 25 percent. The Harmonized Tariff Schedule of the United States (HTSUS) tariff classifications included in the list cover most of the remaining HTSUS tariff classifications not already identified in the prior three lists.
The additional HTSUS tariff classifications covered by this latest round of proposed Section 301 tariffs can be found on the USTR website. To view the Section 301 Federal Register notices containing the prior three lists, please click on the following links:
The May 17 notice sets forth the process for public comments – including a public hearing – on the products included in this latest proposed list, and the level of the proposed additional duties, if any.
Thus, companies have the opportunity to present their views on specific products before the list is finalized and before the tariffs become effective, in an effort to seek the removal of such products from the final list. But there is less than one month before the window closes.
- Interested parties must submit a request to appear at the hearing and a summary of its testimony by June 10.
- Written comments are due on June 17.
- There will be a public hearing starting on June 17.
Post-hearing comments (to rebut statements made at the hearing) are due within seven days of the last day of the public hearing. USTR will then review these comments before issuing the final list.
In its notice, the USTR requests that the comments address the following:
- The specific products to be subject to increased duties, including whether products listed in the Annex should be retained or removed, or whether products not currently on the list should be added.
- The level of the increase, if any, in the rate of duty.
- The appropriate aggregate level of trade to be covered by additional duties
Commenters recommending removal of specific products from the list must explain why removal will notimpede efficacy of this Section 301 action and whether maintaining such tariffs would inordinately harm US interests, including affected companies and their customers.
In this regard, the notice specifically states:
USTR requests that commenters address specifically whether imposing increased duties on a particular product would be practicable or effective to obtain the elimination of China's acts, policies and practices, and whether maintaining or imposing additional duties on a particular product would cause disproportionate economic harm to US interests, including consumers and small or medium-size businesses.
Silver lining: mitigation efforts and making your views heard
As we noted above, there is still time to make your views heard before the tariffs are imposed through providing comments, oral and/or written, by the dates listed above. As part of this process companies will have an opportunity to seek the removal of products before the final list is established, if they can make their case and meet the criteria discussed above. As noted, one key criterion is whether the additional duties would cause disproportionate economic harm to US interests, including consumers and small or medium-size businesses.
Even if and when the proposed tariffs are adopted as final, companies still may be able to mitigate the impact of the duties upon their business, notwithstanding the comprehensive coverage of Section 301 tariffs over virtually all imports of Chinese origin. Such mitigation strategies can include reviewing proper tariff classification and country of origin, ensuring that the declared value is not overstated, and taking advantage of specialized Chapter 98 HTSUS classifications.2
Finally, if USTR establishes a process for submitting exclusion requests for specific products classified under a covered tariff provision, companies may get a second chance to seek the removal of specific products from the duties imposed. Previously, USTR has established exclusion processes for the first two lists of Chinese products subject to Section 301 duties and has stated that it will establish an exclusion process for the third list by June 30, 2019.
If you have any questions or would like to discuss your company's situation, please feel free to reach out to DLA Piper LLP (US).
1 See Section 301 of the Trade Act of 1974, 19 U.S.C. § 2411, as amended. See also Section 301 trade action against Chinese products: time for quick action, DLA Piper International Trade Alert issued on April 4, 2018.
2 See Section 301 Additional Tariffs on Imports of Chinese Products: Options for High Tech Manufacturing Companies, DLA Piper International Trade Alert issued on October 3, 2018 for a discussion of additional options available to minimize the impact of the Section 301 duties.