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Preserving Refunds on Goods Excluded from Section 301 Tariffs

Wednesday, July 24, 2019
Sandler, Travis & Rosenberg Trade Report

As the federal government expands the number of goods imported from China that are excluded from the 25 percent Section 301 tariffs, importers of such goods should take specific steps to maximize their refunds of those tariffs, says Sandler, Travis & Rosenberg customs attorney David Cohen. These include keeping a close eye on liquidation dates and the ever-changing list of excluded goods.

To date, Section 301 tariffs have been imposed against three separate lists of goods imported from China: a 25 percent tariff on List 1 goods (valued at about $34 billion) effective July 6, 2018; a 25 percent tariff on List 2 goods (valued at about $16 billion) effective Aug. 23, 2018; and tariffs of 10 percent and then 25 percent on List 3 goods (valued at $200 billion) effective Sept. 24, 2018, and May 10, 2019, respectively.

The Office of the U.S. Trade Representative is currently working its way through thousands of requests for tariff exclusions for List 1 and List 2 goods, with some approved but more denied. Requests for exclusions for List 3 goods are still being accepted and are due by Sept. 30.

If your company imports a product that has been excluded or is covered by a pending exclusion request (i.e., it meets the specified product description), that exclusion applies or will apply to your product, even if your company did not request the exclusion. As a result, Cohen states, it’s important for importers to stay up-to-date on not only those exclusions that have already been granted but also those that have been requested and are still awaiting a final decision.

In addition, importers should closely monitor the status of entries of their goods that have been or may be excluded. While exclusions are retroactive to the date the relevant tariff was first imposed, Cohen explains, if the liquidation of an entry of excluded goods becomes final importers will have no options to claim retroactive refunds of tariffs paid on them.

According to Cohen, importers of excluded goods have two primary options to avoid such a scenario. One is to request an extension of liquidation from U.S. Customs and Border Protection prior to the expiration of the 314-day liquidation cycle. Liquidation can be extended for up to four years in one-year increments. For example, entries of List 3 goods made on Sept. 24, 2018 (the date on which the 10 percent tariff on such goods became effective) are scheduled to liquidate as of approximately Aug. 4 unless an extension is requested.

Second, if entries of excluded goods have already liquidated (which currently may include List 1 and List 2 goods), importers may file a protest within 180 days of the date of liquidation.

Sandler, Travis & Rosenberg has substantial experience helping importers manage these tasks in order to request, obtain, and take advantage of Section 301 tariff exclusions. For more information, please contact David Cohen at (202) 730-4955.

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