Duty Refund Opportunity on Chinese Imports

Trouble with China Tariffs? This Could Help.

Turbulence related to tariffs has become troublingly commonplace. In May of this year, the President announced that retaliatory tariffs on nearly $200 billion of Chinese exports under Section 301 of the Trade Act of 1974 would increase from 10 to 25 percent for tariff codes set forth on the so-called “List 3” products. For U.S.-based businesses that import these goods, which includes merchandise ranging from laptops to shoes to food items, this increase creates a host of problems — decreased sales, the need to rework supply chains and cash flow issues, to name just a few.

The good news?

The Office of the U.S. Trade Representative (USTR) opened a short period for importers to request exclusions from the additional 25 percent tariff imposed on Chinese imports as of September 24, 2018.

But, there’s no time to waste. The deadline to file a request with USTR is September 30, 2019.  

What’s the benefit?

While applying for the refund does not guarantee you’ll receive it, if the exclusion is approved, the cost savings can be significant. Any exclusions granted will result in a duty refund retroactive to September 24, 2018, and will remain in effect for one year from the date on which the exclusion is published on the Federal Register. This will allow companies the time needed to make some short-term supply chain shifts necessary to reduce their tariff exposure.  

Obtaining an exclusion is one of the most effective ways to mitigate the financial liability of increased tariffs on the import of Chinese origin goods, and the least disruptive to a company’s existing supply chain. 

How do you apply?

In the online request form, a company needs to demonstrate that it cannot source the goods from a U.S. or third country supplier, and that the company will suffer a significant financial impact from the additional tariffs. Importantly, the requester can claim “small business” status (as defined in the Small Business Administration regulations), which may increase the chances of success.  Many companies have already applied for this exclusion, and time is running out.