Changes to Cuban Policy

The Trump administration is tightening restrictions on travel, trade, and remittances to Cuba.  The new changes are as follows:

  1. Vessels and aircrafts initially authorized to fly to Cuba on temporary sojourn will no longer be able to.
  2. OFAC is placing a cap of $1,000, the maximum amount that one remitter can send per quarter to one Cuban national as a family remittance.
  3. Leasing commercial aircrafts to Cuban State-owned airlines has been restricted.
  4. A ban on flights to nine Cuban cities has been implemented.

If you have any questions or want any more details, please feel free to contact us.

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Exclusion Process for Items on List 4A Announced

On October 23, 2019, the U.S. Trade Representative announced that an exclusion process for the List 4A products will open on October 31, 2019. The deadline for submitting an exclusion request is January 31, 2020. The products on List 4A (Annex A to Notice of Modification) are currently subject to a 15% additional tariff. Products for which exclusion requests are granted will be excluded from the application of the additional 15% tariff. The exclusion requests must be submitted through an online portal.

Pennington P.A. is highly experienced in assisting companies in the process of filing exclusion requests and responding to the tariff increases. If your products are on List 4A and would like to acquire assistance in this strenuous process, please feel free to contact us. 

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Additional Tariffs on EU Products

On Thursday evening, October 17th, it was confirmed that the tariffs on $7.5 billion of European goods will take effect today, October 18th. On October 2, 2019 the USTR published a list of the E.U. products that will be subject to the additional duties. Air crafts produced in the EU will now have an additional 10% tariff. Other products ranging from whisky to cheese will have an additional 25% tariff.

These tariffs came as a response to the preferential treatment by the EU for aircraft maker Airbus SA. The application of these additional tariffs will depend on the tariff provision and country of origin.

This topic is evolving, and we will keep close watch on this. If you have any questions regarding how this can affect your business, please contact us.

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USTR Announces Additional Exclusions to Section 301

On September 17, 2019 the USTR announced additional exclusions to Section 301, Tranches 1, 2, and 3. The current additional duty rate for products on these lists is 25% and it is scheduled to increase to 30% on October 15. However, any Chinese product on Tranche 3 that meets the description of an excluded product can submit an exclusion request.

The exclusions will be retroactive to July 6, 2018 and August 23, 2018 for List 1 and 2 products, respectively, and extend for one year after publication of the USTR notice of exclusion. The exclusions for List 3 products will be effective September 24, 2018 to August 7, 2020.

The USTR claimed that it will continue to add exclusion decisions for Tranche 1 and Tranche 2 routinely. Despite the fact that the exclusion request process has closed for both of these tranches, the exclusion request process for tranche 3 remains open until September 30, 2019. An exclusion process for Tranche 4 has been announced by the USTR, but has not yet opened.

The list of items excluded from additional duties as of September 17, 2019:

https://ustr.gov/sites/default/files/enforcement/301Investigations/%2434_Billion_Exclusions_Granted_September.pdf

https://ustr.gov/sites/default/files/enforcement/301Investigations/%2416_Billion_Exclusions_Granted_September.pdf

https://ustr.gov/sites/default/files/enforcement/301Investigations/%24200_Billion_Exclusions_Granted_September.pdf

If you have any questions about claiming refunds or whether or not you meet the requirements contact us and we will gladly help you navigate these regulations.

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OFAC Enforcement Against Va. Forwarder and Fl. Shipper

I. Virginia Forwarder

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a Finding of Violation to DNI Express Shipping Company (“DNI”), incorporated in McLean, Virginia, for a violation of § 501.602 of the Reporting, Procedures and Penalties Regulations, 31 C.F.R. part 501 (RPPR) as to the provision of farm equipment to Sudan. Specifically, DNI violated § 501.602 of the RPPR by providing information to OFAC during the pendency of OFAC’s investigation, including a subpoena response, that contained contradictory, false, materially inaccurate, materially incomplete, and misleading statements.

OFAC considered the following to be aggravating factors:

(1) DNI, through counsel, demonstrated reckless disregard for its U.S. sanctions requirements by failing to provide accurate and complete information in response to an OFAC Administrative Subpoena;

(2) DNI, and its owner, facilitated both the shipment and attempted shipment of goods to Sudan and provided financing for such shipments. Accordingly, DNI had actual knowledge that its responses to OFAC’s Administrative Subpoena concerning the facilitation of the shipment and attempted shipment of goods to Sudan and related financing were false, materially inaccurate, materially incomplete, and misleading;

(3) After supplying OFAC with responses that were false, materially inaccurate, materially incomplete, and misleading, OFAC gave DNI the opportunity to correct or clarify its original responses. However, DNI failed to appropriately amend its responses and instead confirmed its original responses; and

(4) By providing false, materially inaccurate, materially incomplete, and misleading statements, DNI did not fully cooperate with OFAC’s investigation.

For more information, please visit the following web notice.

II. Florida Shipper

Separately, OFAC issued a issued a Finding of Violation to Southern Cross Aviation, LLC (“Southern Cross”), incorporated in Florida and with offices in Florida and North Carolina, for a violation of the RPPR. OFAC stated it had reason to believe that Southern Cross was recently involved in the sale of several helicopters destined for Iran via an Iranian businessman based in Ecuador.  Southern Cross violated § 501.602 of the RPPR by failing to provide complete information to OFAC in response to an Administrative Subpoena issued to Southern Cross.

OFAC considered the following to be aggravating factors:

(1) Southern Cross demonstrated reckless disregard for its U.S. sanctions requirements by failing to provide accurate and complete information in response to an OFAC Administrative Subpoena;

(2) Southern Cross had actual knowledge or reason to know of the conduct that led to the violation in this instance; and

(3) Southern Cross did not fully cooperate with OFAC’s investigation.

For more information, please visit the following web notice.

New information on OFAC Civil Penalties and Informal Settlements is now available.

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Delay on Certain Tariffs on Chinese Goods


Today, August 13, 2019, The United States Trade Representative announced that certain products such as cell phones, laptops, video games consoles, certain toys, some clothing and shoes are being removed from the forthcoming tariff list based on health, safety, national security, and other factors. These items will not face the additional tariffs of 10 percent which were planned to take effect September 1st. They will be delayed until December 15. The list of the items that will still be affected by the tariff on September 1st has been updated.

The exact details along with the lists of the tariff lines that are affected have been posted to the Federal Register. An exclusion process for these products will shortly be released as well.

This topic is still developing, and we will keep a close watch on it. If you have any questions or would require any legal advice, please feel free to contact us.

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Update on List 4 Trump Tariffs

On August 1, 2019, President Trump announced on Twitter that the U.S. will impose a 10% tariff on roughly $300 billion worth of Chinese imports (List 4). The additional duties will go into effect beginning September 1, 2019. A confirmation from the USTR has not been issued yet.

The proposed list 4 was released on May 13, 2019. It covers essentially all of the Chinese products that were not covered by the previous lists. The comment period has been closed. We expect that the USTR will provide exclusion request procedures as it did in the previous three lists.

If you are interested in participating in the exclusion process or exploring possibilities to minimize or eliminate Section 301 duties, please contact us.

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Exclusion Request for List 3 Products Available from June 30, 2019 to September 30, 2019

On June 20, 2019, the U.S. Trade Representative announced that an exclusion process for List 3 products would open at noon EST, on June 30, 2019. The products on List 3 are currently subject to a 25% additional tariff. The deadline for submitting an exclusion request is September 30, 2019.

Products for which exclusion requests are granted will be excluded from the application of the additional 25% tariff.  The exclusion will be effective retroactively from September 24, 2018 (the effective date for List 3) and extend for one year after the exclusion is published in the Federal Register. Importers who have paid the additional duties will have the opportunity to seek refunds from U.S. Customs and Border Protection.

If your products are on List 3 and you wish to submit exclusion requests, please contact us.

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UPDATE- Section 301 (Tranche 3) Duties as of May 10, 2019

Yesterday, May 9, 2019, U.S. Customs and Border Protection (“CBP”) clarified that the Section 301 tariffs apply only to merchandise exported on or after May 10, 2019. Today, May 10, 2019, CBP provided updated guidance of the following (CSMS #19-000238):

  • Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on May 10, 2019, and exported to the United States on or after May 10, 2019, the rate of additional duties on imported articles classified in a subheading covered by the September 21, 2018 Federal Register notice, as amended, will be 25 percent ad valorem.
  • For subject goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on May 10, 2019, and exported to the United States on or after May 10, 2019, report the following HTS numbers and duty rates:

  HTS: 9903.88.03 and 9903.88.04

  Duty Rate: 25 percent 

  • For subject goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on May 10, 2019, and before June 1, 2019, and exported to the United States before May 10, 2019, report the following HTS number and duty rate:

  HTS: 9903.88.09

  Duty Rate: 10 percent 

  • The subject imports of China that are entered into the United States on or after June 1, 2019 are subject to the 25 percent rate of additional duty under HTS 9903.88.03 and 9903.88.04.
  • The Section 301 duties only apply to products of China, and are based on the country of origin, not country of export.

                Accordingly, goods exported before May 10, 2019 must be entered in the U.S. or withdrawn from warehouse before June 1, 2019 in order to qualify for the lower 10% additional duty rate. Goods entered on June 1, 2019 or later will be subject to a 25% additional duty rate irrespective of the date of export.

                If you have any questions, please feel free to contact us.

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Most Recent Update on Section 301 List 3 Tariffs

Following up with yesterday’s blog on Section 301. Today the USTR published in the Federal Register the formal notice to increase the additional tariffs on List 3 products. The Notice reads:

“Effective with respect to goods (i) entered for consumption, or withdrawn from warehouse for  consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States is modified …”

Due to the confusion this language creates, this afternoon, Customs Customs and Border Protection (“CBP”) held an ACE Trade Call where representatives from CBP Trade Remedy team clarified that the increased tariff only applies to goods exported on or after May 10, 2019. Because ACE does not currently have a duty rate/tariff classification tied to export dates, importers who have Chinese origin goods subject to List 3 Section 301 tariffs can choose to do one of the following:

  • File the entry summary and pay 25%, then apply for a Post Summary Collection (“PSC”) to then possibly collect a refund; or
  • Do not file entry summary immediately (under CBP regulations, importers can file entry summaries within 10 business days after the time of entry), hopefully within this period, CBP has promulgated a clear filing instruction by which the importers can file entry summary using 10% tariff.

This topic is evolving, and we will keep close watch on this. If you have any questions regarding how to legally avoid paying Section 301 tariff, please feel free to contact us.

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