The costly Trump-Era tariffs and trade policies have largely remained in effect nearly a year into the Biden Administration. Now more than ever, importers are looking for ways to avoid or mitigate duty exposure. Below is the lowdown of present relief from the Trump tariffs and a forecast of further relief to come.
U.S. importers continue to bear the additional 25 percent tariffs on goods made in China, and have since 2018, with no clear relief in sight. The primary front against the tariffs is the current litigation challenging Lists 3 and 4A of the Section 301 Duties on goods from China in the Court of International Trade ("CIT"), which consists of over 3,500 importers disputing close to billions of dollars in duties, arguing, among other things, that the Section 301 Duties were enacted illegally, violating the timing requirements and purpose of The Trade Act of 1974. However, if the litigation is successful, importers will only have relief from List 3 and 4A, and will be obligated to pay the additional duties in the interim. As such, concern for tariff relief for goods on List 1 and 2, as well as List 3 and 4A, remains.
Proposed Legislation to Modify the Section 301 Exclusion Process
There is a Bill before Congress that would reshape the landscape for Section 301 exclusions. The Trade Act of 2021 as part of the greater U.S. Innovation and Competition Act of 2021 ("USICA") contains provisions that would impose (1) a statutory timeframe imposed on the USTR when making exclusion determinations, (2) audits of the exclusion process, and (3) reinstitution of all expired exclusions that would extend for up to 18 months and apply retroactively during the gap period. Ultimately, the Act would be beneficial to importers in that it would reinstate the exclusion process and create a more structured and less arbitrary systems of handling the exclusions and their potential extensions. The bill was passed in the Senate and has yet to pass the House, although some members of the Ways and Means Trade Subcommittee, including Representative Earl Blumenauer, have expressed a willingness to work with the USTR to develop a more acceptable exclusion process in lieu of imposing the strict statutory requirements.
Section 301 Exclusion Comments & Likelihood of Reinstatement
In a press release on October 4, USTR Kathrine Tai announced that her office would restart the targeted tariff exclusions process to mitigate the raised cost on Americans resulting from the tariffs. As of now, the USTR is reviewing the hundreds of comments submitted by interested parties on the possible reinstatement of 549 Exclusions that were previously extended pursuant to the USTR's request for comments via 86 Fed. Reg. 56345 (Oct. 8, 2021). Although the USICA would uniformly reinstate the avenue for expired exclusions, with retroactive application, it is uncertain the proposed legislation will pass in its current form, and the ongoing comment process is a proactive opportunity for importers to participate in the potential reinstatement of Section 301 tariff exclusions.
Steel and Aluminum Tariffs
On November 2, the President released a statement following the U.S. agreement with the European Union ("EU"), which allows EU steel and aluminum to enter duty-free under a tariff-rate quota and extends exclusions for EU products for a period of two years. The President's announcement follows the Interim Final Rule, published by the Bureau of Industry and Security, which modified the Section 232 Exclusion process to include groups of products in larger batches on the same single exclusion request as long as the range of products can be classified in the same 10-digit HTSUS statistical reporting number. As part of the 232 Exclusion overhaul, there are now 108 General Approved Exclusions ("GAEs") for steel products and 15 GAEs for aluminum products presently available for use by any importer that do not include quantity limits.
Recent court cases have also defined the parameters of the Section 232 Duties. In the Prime Source cases, the CIT struck down the Section 232 Duties on steel and aluminum derivatives, such as wire, cable, fasteners, and bands, holding that the President did have the authority to impose the tariffs. However, in Transpacific Steel, the Court of Appeals for the Federal Circuit ("CAFC") upheld the President's increase in Section 232 Duties on steel imports from Turkey, reversing the CIT's judgment that held they were illegal. Besides these adjustments, under the Biden Administration, the Steel and Aluminum Tariffs are here to stay.
It is crucial for importers and the trade community to review the tariff exclusions for potential application, and to stay updated on modifications to the exclusion process and for general tariff relief. Assistance from Customs & International Trade Counsel can be exceptionally advantageous for tariff relief. In numerous instances, the Braumiller Law Group has helped importers navigate these complex and high-dollar exclusions, develop strategies to avoid potential additional tariffs, and, when necessary, successfully challenge Customs & Border Protection's ("CBP") misapplication of the tariffs and exclusions.
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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.