USTR Reinstates Limited Number of Section 301 Tariff Exclusions on Imports from China

March 2022

BY

Damon V. PikePrincipal, Customs & International Trade Services

On March 23, 2022, the United States Trade Representative (USTR) announced via the Federal Register that it is granting limited relief to U.S. importers by reinstating a number of exclusions from the China Section 301 tariffs, which impose additional 7.5% or 25% ad valorem duties on goods imported from China.
 
On October 8, 2021, the USTR published a Federal Register notice that sought public comments on whether to reinstate 549 previously extended tariff exclusions. Following the close of the comment period, the USTR published the above-mentioned Federal Register notice announcing the reinstatement of exclusions for 352 categories of products currently covered by the Section 301 tariffs. Several  of the reinstated exclusions cover merchandise imported by clients for which BDO prepared the petition requesting reinstatement.
 
The 352 tariff exclusions cover certain products classified in Chapters 84, 85, 86 and 90 of the Harmonized Tariff Schedule of the United States (HTSUS). Specifically, the reinstated exclusions are available for any product that meets the description in the product exclusion and is governed by the scope of the 10-digit HTSUS subheadings and the product descriptions provided in the Annex to the March 23 Federal Register notice.
 
These exclusions apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on October 12, 2021, that are not liquidated (final) or to entries that are liquidated (not final), but within the 180-day post-liquidation protest period. USTR has extended these exclusions through December 31, 2022 and has indicated they may be considered for further extensions, as appropriate.
 
Importers of products covered by these reinstated exclusions should confirm that their customs brokers are indicating the appropriate secondary HTSUS classification upon entry. In addition, refunds can be obtained for unliquidated entries made on or after October 12, 2021, by filing post-summary corrections with Customs and Border Protection or filing protests against liquidated entries.
 
USTR has not yet indicated whether the 352 reinstated exclusions will be applied retroactively to the date they initially expired, e.g., December 31, 2020. It is also unclear whether additional expired exclusions will be reinstated. In 2021, the U.S. Senate passed legislation (the United States Innovation and Competition Act of 2021), which includes the reinstatement of all previously granted exclusions (approximately 2,200) and the establishment of a new exclusion process. However, the U.S. House of Representatives did not include these provisions in a companion bill. These bills are scheduled to go to conference for reconciliation before being sent to President Biden for signature and it is not known which provisions the final bill will include. In addition, a case is pending in the U.S. Court of International Trade challenging the legality of the third and fourth tranches of the Section 301 tariffs, which constitute the majority of the goods imported from China subject to additional tariffs. Oral argument in that case was held in February 2021 and the decision is expected in the near future, with an appeal almost certain.
 

How BDO can help

BDO can assist importers with the preparation and filing of administrative protests for the refund of duties covered by the reinstated exclusions. BDO can also review the tariff classifications for products to determine if either a reinstated or previous tariff exclusion is or was available and if any refunds can be claimed based on the entry date of the merchandise.
 
Our services include: 
  • Tariff classification reviews
  • FTA qualification
  • Customs valuation and transfer pricing analysis
  • Import and export compliance assessments
  • Supply chain planning
  • Customs rulings, protests and other administrative filings
  • VAT registration