USTR Accepting Comments for Proposed 301 Tariff Increase

The U.S. Trade Representative is accepting written comments until September 20.2019 for the proposed action to increase the 301 Tariffs for Lists 1 through 3 from 25% to 30%.

Comments must be submitted through the Federal eRulemaking Portal using docket number USTR-2019-0015. The USTR notice states that because China has retreated from its commitments to end unfair trade practices, maintaining the 301 tariff rate at 25% may no longer be appropriate.

The proposed modification of the duty rate from 25% to 30% would go into effect on October 1, 2019.

Lists 4A and 4B for 301 China Tariffs Published

The US Trade Representative has published a notice in the August 20th Federal Register with Lists 4A and 4B in the latest round of 301 tariffs on Chinese products.

List 4A goes into effect at 10% for goods entered for consumption, or withdrawn from warehouse for consumption, on or after September 1, 2019. These goods will be entered using HTS subheading 9903.88.15.

List 4B goes into effect at 10% for goods entered for consumption, or withdrawn from warehouse for consumption, on or after December 15, 2019. Goods on List 4B will be entered using HTS subheading 9903.88.16.

Articles on list 4B include certain consumer electronics, toys, and footwear and apparel items. These items were delayed to minimize the impact to consumers at Christmas.

Several tariff subheadings proposed for List 4 in May were removed from the final split lists based on health, safety, national security, and other factors, according to the USTR. These items include certain fish, chemicals, bibles, cranes, shipping containers, and child safety seats.

Please contact Vandegrift for an excel version of the 301 tariff lists.

U.S. Customs Proposes New Regulations for Customs Broker Verification of an Importer's Identity

U.S. Customs and Border Protection (CBP) has issued a notice of proposed rulemaking to require Customs brokers to collect certain information from importers to enable the brokers to verify the identity of importers, including nonresident importers.

The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) requires that CBP issue regulations governing the Customs broker identification of importers. The proposed rule would satisfy this requirement by establishing and standardizing the identity collection criteria and creating a required verification process of importer clients. Additionally, the regulations identify procedures for the broker to follow in order to verify the authenticity of the information collected from the importer, require the broker to maintain records of the information collected to substantiate the importer’s identity, and empowers Customs to assess a monetary penalty of up to $10,000 for each violation for a broker that fails to collect the required information, as well as revoke or suspend the license or permit of the broker.

The proposed regulations state the broker must collect, at a minimum, the following information, if applicable, from the importer at the time the POA is obtained:

1. The client’s name

2. For a client who is an individual, the client’s date of birth

3. For a client that is a partnership, corporation, or association, the grantor’s date of birth

4. For a client that is a partnership, corporation or association, the client’s trade or fictitious names

5. The address of the client’s physical location (for a client that is a partnership, corporation, or association, the physical location would be the client’s headquarters) and telephone number

6. The client’s email address and business website

7. A copy of the grantor’s unexpired government-issued photo identification

8. The client’s Internal Revenue Service (IRS) number, Employer Identification Number (EIN) number, or Importer of Record (IOR) number

9. The client’s publicly available business identification number, e.g., DUNS number

10. A recent credit report

11. A copy of the client’s business registration and license with state authorities

12. The grantor’s authorization to execute the POA on behalf of the client

The broker will be required to independently verify each of the data points listed above. For example, the grantor’s authorization will need to be notarized whenever possible. Additionally, the broker will be required to check if the client is a sanctioned or restricted party, or if the client is debarred from doing business with the U.S. government.

A broker may not transact Customs business on behalf of the importer until the information is collected and verified. Brokers will be required to maintain records of the information used to substantiate the importer’s identity and must make the records available to Customs upon request.

For existing clients, brokers will have two years to verify this information for partnerships and three years for all other existing clients. Brokers will be required to reverify each client’s identity annually using the procedures outlined above.

When brokers verify the importer’s identity, CBP is better assured that importers are conducting legitimate trade transactions. By formalizing the verification process and requiring that a reverification process be carried out annually, CBP believes a broker’s knowledge of its importer client would be improved and would help prevent brokers from engaging in business with fraudulent companies. The proposed rule would reduce identity theft and counterfeit or IPR-violative imports, and would help enforce ADD/CVD laws, as well as reduce the importation of unsafe merchandise.

Comments on the proposed regulations are due by October 15, 2019.

USTR Announces Next Steps on Proposed 10 Percent Tariff on Imports from China

The United States Trade Representative (USTR) today announced the next steps in the process of imposing an additional tariff of 10 percent on approximately $300 billion of Chinese imports.

On May 17, 2019, USTR published a list of products imported from China that would be potentially subject to an additional 10 percent tariff. This new tariff will go into effect on September 1 as announced by the President on August 1.

Certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent.

Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles. Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.

USTR intends to conduct an exclusion process for products subject to the additional tariff.

The USTR will publish in the Federal Register as soon as possible additional details and lists of the tariff lines affected by this announcement.

1st Set of Exclusions to 301 Tariffs List 3 Published

The U.S. Trade Representative has published the first set of exclusions to the List 3 of the 301 Chinese tariffs in today’s Federal Register. Each of the 10 exclusions is product specific and may be claimed using HTS 9903.88.13.

Goods covered under this latest exclusion will no longer be subject to the 25% additional duty. This set of exclusions is retroactive to September 24, 2018 and will remain in place for one year from today.

Please contact Vandegrift for a full list of exclusions issued to date for the 301 tariffs, and for assistance with obtaining refunds for eligible goods.

1st Set of Exclusions to 301 Tariffs List 2 Published

The U.S. Trade Representative has published the first set of exclusions to the second tranche of the 301 Chinese tariffs in today’s Federal Register. Each of the 69 exclusions is product specific and may be claimed using HTS 9903.88.12. Goods covered under this latest exclusion will no longer be subject to the 25% additional duty. This set of exclusions is retroactive to August 23, 2018 and will remain in place for one year from today.

Please contact Vandegrift for a full list of exclusions issued to date for Lists 1 and 2, and for assistance with obtaining refunds for eligible goods.

Sixth Set of Exclusions to 301 Tariffs Published

The U.S. Trade Representative has published a sixth set of exclusions to List 1 of the Chinese tariffs. These products will no longer be subject to 25% additional duties.

The exclusions are retroactive to July 6, 2018, and will remain in place until July 9, 2020. The exclusions are to be claimed using HTS 9903.88.11. All 110 exclusions on this most recent list are product specific.

Please contact Vandegrift for a complete list in excel of the exclusions to List 1 of Chinese 301 tariffs and for obtaining refunds for goods on the exclusion lists.

Exclusion Process for List 3

The U.S. Trade Representative has announced the procedures to request exclusions from 301 duties for goods found on List 3. An exclusion request form must be completed and submitted through a portal (http://exclusions.USTR.gov) which will open on June 30, 2019. The deadline to submit the requests is September 30, 2019. Each request must specifically identify a particular product and provide supporting data and the rationale for the requested exclusion. Responses to individual exclusion requests are due 14 days after the request is posted on the USTR portal. Any replies to responses to an exclusion request are due the later of 7 days after the close of the 14 day response period, or 7 days after the posting of a response. The USTR will evaluate each request on a case by case basis. Granted exclusions will be effective retroactively to September 24, 2018 and extend for one year after the publication of the exclusion determination in the Federal Register.

We encourage importers to act quickly to submit their exclusion requests for List 3. List 3 has over 5700 items, far more than Lists 1 and 2. List 1 has about 800 items. 214 exclusions have been granted to date with 2116 exclusion requests still undergoing review. List 2 has about 280 items. No exclusions have been granted yet. 1259 exclusion requests have been denied and 1661 requests are undergoing review. We anticipate there will be many thousands of requests for List 3 which will take the USTR quite some time to review given the status of exclusion requests for Lists 1 and 2.

Please contact Vandegrift for any questions regarding the Chinese 301 tariffs and obtaining refunds for goods on these exclusion lists.

Fifth Set of Exclusions to 301 Tariffs Published

The U.S. Trade Representative has published a fifth set of exclusions to List 1 of the Chinese 301 tariffs. These products will no longer be subject to 25% additional duties. 

The exclusions are retroactive to July 6, 2018, and will remain in place until June 4, 2020. The exclusions are to be claimed using HTS 9903.88.10. There is one tariff number and numerous product-specific items on this most recent list.

Please contact Vandegrift for any questions regarding the Chinese 301 tariffs and obtaining refunds for goods on the exclusion lists.

Mexican Tariffs Averted

The tariffs on goods from Mexico that were threatened by the White House have now been “indefinitely suspended.” Tariffs of 5% were to have gone into effect today, with incremental increases up to 25%, in order to stem the tide of illegal immigration from Mexico. 

The State Department issued a joint declaration outlining plans to address efforts to curb the “challenges of irregular migration.”

President Trump Threatens Tariffs on Goods from Mexico

President Trump tweeted yesterday that he plans to impose a 5% tariff on all goods from Mexico starting June 10th as a measure to stem the tide of illegal immigration. A White House announcement went on to state that if the immigration crisis persists, the tariffs will be raised to 10% on July 1st, 15% on August 1st, 20% on September 1st, and 25% on October 1st. The tariffs would remain permanently at 25% “unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory.” 

This move could jeopardize the USMCA trade agreement. Mexico is the third largest trading partner with the United States with $611.5 billion in total goods trade during 2018, with imports accounting for $346.5 billion.

We will continue to update you as more details become available. 

CTPAT Minimum Security Criteria Updated

The Minimum Security Criteria (MSC) for the Customs Trade Partnership Against Terrorism (CTPAT) have been updated and posted to the Public Library on the CTPAT portal. The long overdue update is meant to be reflective of the current supply chain environment and the threats facing today’s global supply chain. Issues related to cybersecurity, the protection of the supply chain from agricultural contaminants and pests, the prevention of money laundering and terrorism financing, and the proper use and management of security technology, such as intrusion alarms and security camera systems, have been incorporated into the program’s new criteria. CTPAT members are expected to implement the new criteria throughout 2019. Validations taking place in 2020 will be based upon the new MSC.

The MSC booklet includes an approach for implementing the MSC according to the following phases:

  • Phase 1 – Cybersecurity, Conveyance and IIT Security, and Seal Security

  • Phase 2 – Education, Training, and Awareness; Business Partner Security; Risk Assessment

  • Phase 3 – Security Vision and Responsibility, Physical Security, Physical Access Controls

  • Phase 4 – Agricultural Security, Personnel Security, Procedural Security

CTPAT members are encouraged to work closely with their Supply Chain Security Specialists to ensure their security profiles are up to date in the portal and in alignment with the new security criteria.

Please contact Vandegrift if you would like a copy of the new MSC.

Turkey GSP Status Removed

President Trump has issued a Proclamation removing Turkey from the Generalized System of Preferences (GSP) program. GSP provides for the duty free importation of a wide range of products from designated beneficiary developing countries. 

The Proclamation states that “based on its level of economic development, it is appropriate to terminate Turkey’s designation as a beneficiary developing country effective May 17, 2019.” Additionally, the exemption for Turkey from application of safeguard measures on solar cells and large residential washers is removed.

In a separate announcement, the White House has reduced the Section 232 steel tariffs from 50% to 25% for steel imports from Turkey due to the decline in shipments of steel articles from that country. This takes effect May 21, 2019.

Section 301 List 4 is Proposed

The U.S. Trade Representative has published a notice in today’s Federal Register proposing further action by imposing additional tariffs up to 25% on nearly all remaining HTS numbers not currently found on Lists 1 through 3. The exceptions are pharmaceutical products, certain medical goods, rare earth materials, critical minerals, and goods that have been previously granted exclusions. The full list of proposed HTS numbers is in the Annex to the notice. The list impacts wearing apparel, footwear, toys, electronics, and other consumer goods.

The USTR is accepting comments according to the following schedule:

June 10, 2019 – Due date for filing requests to appear and a summary of expected testimony at the public hearing.

June 17, 2019 – Due date for submission of written comments.

June 17, 2019 – Public hearing at the U.S. International Trade Commission.

Seven days after the last day of the public hearing: Due date for submission of post-hearing rebuttal comments.

When submitting comments, the public should address the tariff numbers to be subject to the increased duties, including whether the subheadings listed in the Annex 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; and the appropriate aggregate level of trade to be covered by additional duties. 

In commenting on the inclusion or removal of particular subheadings, commenters should address specifically whether imposing increased duties on a particular product would be practicable or effective to obtain the elimination of China’s acts, policies, and practices, and whether imposing additional duties on a particular product would cause disproportionate economic harm to U.S. interests, including small- or medium-size businesses and consumers. Further details on how to submit comments are found in the Federal Register notice. We encourage all interested parties impacted by List 4 to participate in this process.

Importers should also take a close look at their Customs bonds to ensure sufficient coverage should these additional duties go into effect.

Based on the date schedule above, the List 4 duties would not go into effect prior to June 24, 2019. The G20 summit is scheduled to be held in Japan on June 28-29, 2019. President Trump is expected to meet with Chinese President Xi at the summit which could impact whether or not List 4 goes into effect or at what duty rate. 

Vandegrift will continue to keep you updated as new information becomes available.

Fourth Set of Exclusions to 301 Tariffs Published

The U.S. Trade Representative has published a fourth set of exclusions to List 1 of the Chinese 301 tariffs. These products will no longer be subject to 25% additional duties. The exclusions are retroactive to July 6, 2018, and will remain in place until May 14, 2020. There are five tariff numbers and numerous product-specific items on this list.

The third set of exclusions will remain in place until April 17, 2020. The second set of exclusions to List 1 is in effect until March 24, 2020. The first set of exclusions to List 1 will remain in place until December 27, 2019. These lists are also retroactive to July 6, 2018.

Importers need to closely watch liquidation dates to ensure post summary corrections or protests are timely filed to take advantage of these exclusions during the allowed timeframes.

Please contact Vandegrift for any questions regarding the Chinese 301 tariffs and obtaining refunds for goods on these exclusion lists.

301 Tariff Increase Recap

The 301 tariff rate for List 3 increased from 10% to 25% effective for goods with an export date of 5/10/19 and later, and with an entry date of 5/10/19 and later. The HTS numbers 9903.88.03 and 9903.88.04 remain in effect and are subject to the 25% duty rate.

For goods that are exported prior to 5/10/19, but are released from 5/10/19 and before 6/1/19, the 301 tariff rate for List 3 will remain at 10%. The HTS number to be used for this period is 9903.88.09.

There is no news yet on whether List 4 for the remaining tariff numbers will go into effect. Vandegrift will continue to monitor the situation and keep you advised.