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Tariff Increase on Imports from China Set for May 10; Exclusion Process Coming

Thursday, May 09, 2019
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Trade Representative has issued a formal notice confirming that the additional tariff on $200 billion worth of goods (List 3 goods) imported from China will be increased from 10 percent to 25 percent as of May 10. The notice also reiterates USTR’s intention to implement a process for requesting exclusions from this tariff but makes no mention of a possible additional tariff on hundreds of billions of dollars’ worth of other imports from China not already subject to higher tariffs under the Section 301 process (List 4 goods).

Please contact trade law firm Sandler Travis & Rosenberg, P.A. to discuss how you can reduce your exposure to these tariff increases through early importation or entry, tariff classification, tariff engineering, first sale, product exclusion requests, and other methods.

Effective Date

The USTR notice amends the Harmonized Tariff Schedule of the U.S. to provide that the tariff increase for List 3 goods will be effective with respect to goods (a) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (b) exported to the U.S. on or after May 10, 2019.

USTR confirmed verbally to ST&R trade attorney David Cohen that the use of “and” in the language above is intentional, which would provide a brief respite from the tariff increase for goods exported before 12:01 a.m. EDT on May 10. However, ST&R will continue to monitor government notices and instructions for consistency with this intent.

Exclusion Requests

USTR also states that it will publish a separate notice describing a process by which interested persons may request the exclusion of specific products from the additional tariff on List 3 goods, including procedures for submitting requests and opposition to requests. While it is unclear when this process may get underway, importers of List 3 goods can start preparing now to file exclusion requests for their products.

Negotiations Ongoing

According to the notice, the president elected to increase the additional tariff on List 3 goods due to a lack of progress since March in negotiations toward a bilateral trade agreement and because “China has chosen to retreat from specific commitments agreed to in earlier rounds.” In particular, Beijing reportedly reversed course on codifying those commitments in law and said it would instead implement them through regulatory and administrative actions, which seems to have raised questions of enforceability for the U.S.

Senior Chinese officials are due in Washington May 9 to resume negotiations and U.S. officials have said progress in those talks could play a role in whether the additional tariff increase proceeds as planned.

(This is an evolving situation. For the latest on these actions, visit our Tariff Action Resource page)

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