United States: New Section 301 Tariffs Proposed For $200 Billion Of Chinese Goods

The Trump Administration's trade dispute with China widened this week when the Office of the U.S. Trade Representative (USTR) released a proposed list of Chinese products valued at $200 billion that would be subject to an additional a 10% ad valorem duty. USTR's proposed tariffs cover both consumer and industrial products falling under 6,031 tariff subheadings. This action carries out President Trump's promise of more tariffs in response to China's retaliation against the initial round of tariffs imposed under Section 301 of the Trade Act of 1974. In its notice of proposed tariffs, USTR set out a schedule for public comment and hearings ending on August 30.

The initial round of tariffs imposed a 25% ad valorem duty on 818 tariff subheadings that became effective on July 6, with an approximate annual trade value of $34 billion. That notice further proposed the same 25% duty on Chinese products classified in 284 tariff subheadings, with an annual trade value of approximately $16 billion. The selected tariff headings focused on industrially significant technology, including technologies and products related to China's "Made in China 2025" industrial policy program. Notice of this action was published in the Federal Register on June 20, 2018.

Coinciding with the imposition of the first phase of tariffs on July 6, USTR announced procedures for requesting product exclusions from the additional 25% ad valorem tariff.

Interested Parties Need to Act Promptly

The tariffs proposed by USTR are now open for public comment, but the time to respond is short. Requests for product exclusions must be filed no later than October 9, 2018.

Written comments on the 284 tariff subheadings proposed for 25% duties must be submitted by July 23, 2018. A public hearing will be held on July 24, 2018. Requests to appear at the public hearing were required to be submitted by June 29, 2018. Post-hearing rebuttal comments will be due on July 31, 2018.

Written comments on the latest round of 6,031 tariff subheadings proposed for 10% duties must be submitted by August 17, 2018 to be assured of consideration. Public hearings will be held on August 20-23, 2018 and requests to appear at the public hearing must be submitted by July 27, 2018. Post-hearing rebuttal comments will be due on August 30, 2018.

With respect to the latest round of proposed tariffs, USTR invites comments with respect to any aspect of the proposed action, including:

  • The specific tariff subheadings to be subject to increased duties, including whether any listed subheadings should be retained or removed, or whether subheadings 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.

In both of its requests for comment, USTR has asked commenters to address specifically whether imposing duties on a particular subheading would be practicable or effective to obtain the elimination of China's acts, policies and practices related to technology transfer, intellectual property and innovation, and whether maintaining or imposing additional duties on a particular product would cause disproportionate economic harm to U.S. interests, including small or medium size businesses and consumers.

Decisions by USTR on the final list of products subject to the tariffs are expected after consideration of the comments received and hearing testimony. Affected parties should consider providing comments to USTR. Submission of comments can be effective in reducing the scope of the proposed tariffs. After consideration of comments in its initial review, USTR removed 515 tariff subheadings from the initial list of 1,333 proposed to be subject to the first phase of Section 301 tariffs.

Interested persons wishing to seek a product exclusion will need to act promptly to meet the October 9, 2018 deadline for submission of requests that comply with the specific procedures and criteria set out by USTR. Requests will be open for response within 14 days after the request is posted in USTR's docket number USTR-2018-0025 at www.regulations.gov. Replies to responses will be due 7 days after the close of the 14-day response period. USTR published the exclusion procedures in the Federal Register on July 11, 2018.

Steps to Take Now

Faced with looming deadlines for comments and exclusion requests, what steps should importers be taking now?

Review the tariff classifications of products imported from China

The current and proposed Section 301 tariffs are all based on the tariff classification of the imported product. Classification often does not receive the attention that it deserves, especially if the classification is duty free. Now is the time to confirm that your current classifications are correct.

Review the country of origin of products imported from China

The Section 301 tariffs will be applied only to goods falling under a designated tariff classification with China as the country of origin. Determining the origin of a product can involve a complex analysis if the product incorporates inputs from countries other than China. If key components or materials are sourced outside China and are subject only to minor processing or assembly in China, there may be a basis to claim a country of origin other than China. Review of the bill of material for the product detailing the country of origin for each of its inputs should facilitate this analysis.

Consider alternative sourcing and production options

Because the Section 301 tariffs affect only goods of Chinese origin, sourcing the product in another country would avoid the effect of the tariffs. Alternatively, consider whether components and materials with Chinese origin can be sent to another country where the finished product would be produced. If the process in the other country results in a substantial transformation of the Chinese components and materials, there may be a basis to designate that country as the county of origin. Note that while a change in the tariff classification of the Chinese components after incorporation into the finished product would be one factor to consider, it is not decisive. This is a complex question and should be considered very carefully.

Prepare a product exclusion request

If, after consideration of the points discussed above, the product will be subject to Section 301 tariffs, relief may be available by filing a request for a product exclusion with USTR. Considering that the products selected for inclusion will be determined following a public comment and hearing process, requests for exclusion will need to focus on the following factors that USTR identified as relevant to the rationale for exclusion (i.e., whether the particular product is available only from China; whether the imposition of additional duties on the particular product would cause severe economic harm to the requester or other U.S. interests; and whether the particular product is strategically important or related to "Made in China 2025" or other Chinese industrial programs).

For more details about the product exclusion process, see our previous Client Alert here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Daniel D. Ujczo
Similar Articles
Relevancy Powered by MondaqAI
Masuda, Funai, Eifert & Mitchell, Ltd.
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Masuda, Funai, Eifert & Mitchell, Ltd.
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions