The United States Trade Representative (USTR) has announced the fourth list of Chinese products that will be subject to an additional 10 percent tariff under Section 301 of the Trade Act of 1974.1 The USTR split the list into two parts – List 4A and List 4B. For articles on List 4A, the 10 percent tariff will go into effect on September 1, 2019. For articles on List 4B, the 10 percent tariff will go into effect on December 15, 2019. List 4A includes products for which China supplied less than 75 percent of total US imports in 2018.2 List 4B contains products for which China supplied 75 percent or more of total US imports in 2018.
Items subject, and not subject, to List 4
List 4A consists of about 3,230 Harmonized Tariff Schedule of the United States (HTSUS) subheadings, including many iron and steel products, telecommunications equipment, consumer electronics, motor vehicle products, agricultural items (such as beef and pork), beverages, chemicals, glasses, tableware, tablecloths, blankets, bed linens, blinds, clothing in chapters 6101 through 6117, clothing in chapters 6201 through 6217, footwear in chapters 6401 through 6406, and other items. List 4A, with the articles subject to the 10 percent tariff starting September 1, 2019, can be found on the USTR website.
List 4B consists of about 540 HTSUS subheadings, including clothes, toys, and electronics (such as cell phones and laptop computers). List 4B also includes certain chemicals, foods, camping gear, blankets, baby items, small appliances, watches, sports equipment, and clocks. List 4B, with articles subject to the 10 percent tariff starting December 15, 2019, is also available on the USTR website.
Notably, the USTR explained that out of the 3,805 full and partial HTSUS subheadings included in the proposed List 4,3 certain subheadings have been removed entirely from the final list and, thus, will not be subject to the additional 10 percent Section 301 tariff. The removed items include child car seats, shipping containers, cranes used to unload shipping containers, certain fish generally caught in US waters but processed in China, bibles, and some chemicals. The USTR cited health, safety, and national security concerns as the reasons why these subheadings were removed. However, the USTR itself did not identify the specific HTSUS subheadings that were removed.
Companies affected by the tariff imposed on articles included in List 4 may still take action to mitigate the impact of the duties upon their businesses. 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.4
In addition, the USTR has stated that an exclusion process will be provided for goods on Lists 4A and 4B. Thus, companies will be able to seek the removal of specific products from the imposition of the additional duties. Previously, USTR has established exclusion processes for the first three lists of Chinese products subject to Section 301 duties. Like the exclusions granted under the prior processes, we expect that the exclusions for articles on List 4 will be granted retroactively to the date of original imposition of the duties.
DLA Piper attorneys have extensive experience in advising clients on strategies to minimize their exposure to additional duties resulting from the new tariffs as well as in assisting clients with preparing and submitting exclusion requests. If you have any questions or would like to discuss your company's situation, please contact DLA Piper.
1See Section 301 of the Trade Act of 1974, 19 U.S.C. § 2411, as amended. See also Deadline approaching fast for fourth set of Section 301 tariffs, DLA Piper International Trade Alert issued on May 5, 2019.
2See Notice of Modification of Section 301 Action: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, issued by the Office of the United States Trade Representative (USTR) on August 14, 2019.
3See Request for Comments Concerning Proposed Modification of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 85 Fed. Reg. 22564, May 17, 2019.
4See 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.