Update on Section 301 List 3 Tariffs

On May 5, 2019, President Trump tweeted that the U.S. would raise the Section 301 tariffs on List 3 products (i.e., $200 billion of goods) from 10 percent to 25 percent. The President also hinted that tariffs on a fourth list of products ($325 billion of goods) would be forthcoming. On May 7, the U.S. Trade Representative (“USTR”) confirmed that the tariffs on List 3 products would be increased to 25 percent. The increase came as a result of stalled trade negotiations between China and the U.S, but more specifically Chinese officials were allegedly attempting to change the language on a deal they had previously discussed.

On May 8, the USTR issued a notice confirming that the List 3 products will be subject to an increased tariff rate of 25% ad valorem, effective on goods: (1) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern time, Friday, May 10, 2019, and (2) exported to the United States on or after May 10, 2019.

Pursuant to 19 C.F.R. 141.68(a)(3), importers can use the date of a vessel’s arrival in the port limits as the entry date. Therefore, this strategy can be used for goods that are scheduled to arrive in the United States before May 10, 2019, to avoid the duty increase. The importer must make specific requests to have the date of arrival deemed the date of entry when the entry documentation is filed with U.S. Customs and Border Protection. Importers should contact their customs brokers to arrange such filing.

In the May 8, 2019 Notice, the USTR also announces that the long-awaited exclusion process for List 3 Products will be published in a separate notice. Interested persons can request products on List 3 be excluded from the additional duties or to oppose exclusion requests.

There are different ways to legally avoid the Section 301 tariffs, such as:

  1.  submitting an exclusion request;
  2. redesigning or repackaging the products (i.e., tariff engineering by which the importer can fashion merchandise to obtain the lowest rate of duty and the most favorable treatment because merchandise is classifiable in its condition as imported and the processing subsequent to importation is generally not relevant);
  3. reclassifying goods if goods were previously misclassified;
  4. utilizing foreign trade zones or bonded warehouse to defer entry or if goods will be subsequently exported or can be stored until the punitive tariffs are removed;

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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