U.S. Section 301 Tariffs
Exclusion Requests for LIST 3 Products are due to the USTR by September 30, 2019.
If your company imports items on LIST 3, then be aware that exclusion requests may be filed. Importers who wish to file should contact a law firm with experience in these filings and should immediately begin preparations to file.
To schedule an appointment, please contact our offices at Info@TradeLawCounsel.com
Legal Background on Section 301 Tariffs
Actionable conduct under section 301(b)(1) includes, acts, policies and practices of a foreign country that are unreasonable or discriminatory, and which burden or restrict U.S. commerce. Unreasonable actions are those that while not necessarily in violation of, or inconsistent with, the international legal rights of the United States are otherwise viewed as unfair and/or inequitable. These provisions exist as safeguards for any WTO member who feels its economy is being damaged by such conduct of another country. The current section 301 duties have therefore been premised on acts, policies, and practices of the Government of China as they relate to technology transfer, intellectual property, and innovation.
In August of 2017, as a prelude to these section 301 duties, the President called for the USTR to undertake a section 301 investigation. The USTR's Section 301 Report (3/2017) documented the already widely-appreciated conclusion that China’s acts, policies, and practices do involve harmful acquisition of U.S. technologies, and noted that these practices are also important elements of China’s ‘‘Made in China 2025’’ policies. Following the report, President Trump issued a Presidential Memorandum announcement on March 22, 2018, describing the range of actions that the United States would pursue in response, and directing the USTR to compile the first list of tariff items against which 25% ad valorem duties would be assessed.
USTR LIST 1
Background: On April 3, the USTR released its Notice on the proposed strategy to confront the discriminatory technology transfer and intellectual property practices of China which followed on the President's Memorandum of March 22. Comments and testimony were taken between April 23 and May 22 2018. The USTR issued its revised LIST 1, and the 25% tariffs went into effect on July 6, 2018.
Exclusions: The time for filing LIST 1 Exclusion Requests closed on October 9th, 2018.
USTR LIST 2
Background history: On June, 14, 2018, President Trump gave a green light to the USTR's release of the second list of additional 301 tariffs as a response to China's retaliatory duties. The second proposed list (LIST 2) contained 284 additional tariff lines. Comments and testimony were taken between June and July, 2018. On August 7, 2018, USTR announced the final List 2 to be imposed against $16 billion in US-China trade at the 25 percent rate. (USTR retained 279 of the original 284 tariff lines.) On August 16, small revisions to LIST 2 (effective as of August 23, 2018) were announced.
Exclusions: The time for filing LIST 2 Exclusion Requests closed on December 18, 2018.
USTR LIST 3
July 11, 2018, the USTR released the third list of 6,000+ tariff lines in response to China's continued retaliation. LIST 3 represents approximately $200 billion in inbound China-U.S. trade. Comments and testimony were taken between July 7 and August 30. Thereafter, LIST 3 tariffs were announced on September 17, with an effective date of September 24, 2018 at the 10% rate with a ratchet up to 25% schedule for January 1. After suspension of that increase (due to negotiations) the rate eventually did increase to 25% for goods exported to the United States after May 10, 2019.
USTR LIST 4
On Friday, May 13, 2019, the USTR announced List 4 would proceed. Comments and testimony were taken in the month of June 2019. On August 20, 2019, USTR announced (84 FR 43304) that the final List 4 would be bifurcated into List 4a (effective September 1, 2019) and List 4b (effective December 15, 2019). After retaliatory duties were announced by China, the President instructed the USTR to increased these rates by 5%. (As of August 26, both rates are now scheduled to be implemented at the 15% rate.)
Exclusions: No exclusion process has yet been announced.
Periodic Updates on the Trade Negotiations
After imposition of LIST 1 tariffs, the United States and China embarked on a series of trade negotiations. These ultimately collapsed in May 2019, when the Chinese delegation refused to accord with enforcement protocols that would have provided a mechanism to ensure China would followed through with its promises.
May 19, 2018 Update
On May 19, the White House released a joint statement (with the government of China) regarding the status of trade consultations, and Treasury Secretary Steve Mnuchin has stated that the administration is “putting the trade war on hold.” That "cease-fire" failed to hold and by May 29, a White House Statement set a deadline of June 15 for the announcement of the final section 301 percent tariffs. After LIST 1 went into effect, China's retaliatory duties were swiftly announced to negate the US action. On June 15th, the White House pledged to add another round of duties to compensate (LIST 2).
September 17, 2019 update:
The announcement that List 3 would move forward has been accompanies by statements that given retaliation by China, the United States will move forward with tariffs on a LIST 4 (representing approximately $257 billion in additional products from China). At the time, USTR has stated that no procedure for companies to seek exclusions will open until tariffs increase to 25%.
January 2019 Update:
After holding December 2018, talks in China, the United States and China continue negotiations in January in Washington D.C. The question is whether a workable solution can be reached prior to the March 1 deadline. Currently, there are no reports of China’s agreement in principle that its current policies as regarding IP theft and forced technology transfers are unfair or should be in anyway changed. Instead, China has proposed massive purchase offsets - which would over time tend to to politically “capture” certain U.S. demographics, such as LNG and agriculture. If talks fall through, the negotiations could be extended. Or the tariffs on $200 billion in US-China imports (on the USTR’s LIST 3) could be allowed to ratchet-up from 10% to 25%. Thereafter, the USTR also maintains a LIST 4 on the remainder of $250+ billion in trade from China that is not already subject to 301 tariffs or exempted.
February 18, 2019 Update
In the federal budget which passed Friday, Congress included a mechanism demanding that the Trump administration (USTR) to open a process for importers to request and obtain 1-year exclusions from the Section 301 tariffs on LIST 3 goods from China. See, Explanatory Statement, Consolidated Appropriations Act, 2019, page 38. Importers with significant LIST 3 exposure should immediately begin the process of preparing for these exclusion filings. The scope of this LIST 3 covers an enormous amount of trade ($200 billion in goods from China). Importers may use the USTRs’ tariff tool to review coverage issues, while brokers can assist their clients using new ACE reports TR-004 and TR-005 which identify aggregate and line imports subject to safeguards.
In the interim, the Administration has explained that it would be willing to delay the LIST 3 increase from 10% to 25% if China’ comes to the table with substantive structural proposals. Thus, China has not even been willing to acknowledge that a problem exists in its polities, and has not been willing to entertain substantive changes.
March 1, 2019 update:
LIST 1 approval/denial ratio is now 3,300 approved to 4,500 denied. This translates to a 42% overall rate of approval for exclusion requests. Trump’s extension to keep LIST 3 at 10% pending trade discussions will soon be released to the Federal Register; meanwhile, CBP has already adjusted programming in ACE.
Update: April 1, 2019:
Trade talks have been ongoing in “vigorous engagement” according to the USTR’s report on foreign trade barriers. China however “seeks to protect many domestic industries through a restrictive investment regime” and “may condition investment approval on a requirement that a foreign enterprise transfer technology, conduct research and development in China, satisfy exporter local content requirements or make valuable, deal-specific commercial concessions”.
Update May 13, 2019:
After warning China against retaliation for the increase of LIST 3 to 25%, China stepped across that line on Monday May 12, by imposing tariffs against the United States. The USTR promptly announced LIST 4 the next day.
Update August 23, 2019:
After Beijing imposes retaliatory tariffs against US products, the President tweets that an additional 5% will be imposed on all Lists (1-4). Some uncertainty ensues as to whether and when such increases will be effected, however, on August 26, the USTR releases a draft notice increasing List 4a and 4b rates to 15%.
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Curated News on Section 301 Issues:
August 30, 2019: USTR: Federal Register 5% increases to List 4a & 4b. For products covered by Annex A of the August 20, 2019 notice, the rate of additional duty will be 15 percent on the current effective date of September 1, 2019. For products covered by Annex C of the August 20 notice, the rate of additional duty will be 15 percent on the current effective date of December 15, 2019.
August 26, 2019: USTR: Given questions surrounding the tweets of an increase, the USTR releases a draft notice that increases List 4a and 4b rates to 15%.
August 23, 2019: POTUS: After Beijing imposes retaliatory tariffs against US products, the President tweets that an additional 5% will be imposed on all Lists (1-4).
July 4, 2019: MOFCOM dares USA to move forward on LIST 4 by stating any trade deal will require the USA to drop its “unilateral” tariffs against China. (“If the two sides can reach an agreement, the tariffs imposed must be cancelled.”)
June 21, 2019: NRF testimony at the USTR re: LIST 4.
June 19, 2019: USTR: FAQ states the USTR "will issue guidance -- in advance of the date of the expiration of exclusions -- on whether renewals are possible."
June 19, 2019: USTR & Treasury Secretary to meet China's team in Japan before Trump- Xi G-20 summit meeting.
June 12, 2019: Members of Congress suggest USTR should allow extensions on 301 exclusions already granted in LIST 1.
June 12, 2019: NRF: National Retail Federation-commissions a Trade Partnership Worldwide Study on LIST 4 impact.
June 6, 2019: CBP: CSMS# 19-000289: Fifth Round of Products Excluded from Section 301 Duties (Tranche 1)
May 22, 2019: CSMS #19-000260: Section 301 Products Excluded from Duties - Liquidation Extension Request.
May 13, 2019: USTR: LIST 4 tariffs announced.
May 9 & 10, 2019: CBP: CSMS instructions for LIST 3 declarations given increase to 25%.
May 9: USTR: 3rd round of product exclusions.
May 8, 2019: USTR: LIST 3 increase announcement.
May 6, 2019: POTUS: Due to failed trade negotiations, LIST 3 will increase to 25%. LIST 4 to be readied at 25%.
May 4, 2019: USTR: LIST 3 exclusions process to open.
April 25, 2019: Sen. Grassly states 301 tariffs could be removed in stages by both countries. Trade negotiations continue: April 30 (Beijing) and May 8 (Washington DC).
April 19, 2019: CBP: CSMS #19-000212: Submitting Imports of Third Group of Products Excluded from Section 301 Duties.
April 18, 2019: USTR: 3rd Tranche of Product Exclusions: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation
April 10, 2019: CNBC: Treasury Secretary Mnuchin says US and China have agreed on the trade deal enforcement mechanism. “…if we can complete this deal it will be the most significant economic development… in 40 years… We’ve pretty much agreed on an enforcement mechanism. We’ve agreed that both sides will establish enforcement offices that will deal with the ongoing matters. This is something both sides are taking very seriously… I’m not going to comment on the specifics of the tariff and what would stay and what would go away… ”
April 1, 2019: USTR: Report on foreign trade restrictions.
March 26, 2019: Xinhua: Opening up "a distinctive symbol" of China today: vice premier
March 22, 2019: CBP: CSMS #19-000155: Submitting Imports of Second Group of Products Excluded from Section 301 Duties.
March 21, 2019: USTR: Second list of LIST 1 section 301 exclusions.
March 20, 2019: POTUS: President Trump states that the agreement being negotiated with China would not end section 301 tariffs, those tariffs will stay in place for a “substantial period of time. . . because we have to make sure that if we do the deal with China, that China lives by the deal.”
March 5, 2019: Federal Register: USTR Suspends LIST 3 increase “until further notice.”
March 5, 2019: WSJ article: All tariffs could come off.
February 27, 2019: Congress: Testimony of USTR, Robert Lighthizer.
February 28, 2019: House: Explanatory Statement, Consolidated Appropriations Act, 2019, page 38.
February 10, 2019: United Nations: UN Conference on Trade and Development Report.
February 8, 2019: CBP: CSMS #19-000052: Submitting Imports of Products Excluded from Section 301 Duties.
January 30, 2019: CBP: CSMS CSMS# 19-000020: Sect. 201, 232, and 301 Reports Now Available in ACE to Importers and Brokers.
December 27, 2018: USTR: Notice of first LIST 1 exclusions/
December 1, 2018: G20: Trump and Xi reach framework for negotiation. LIST 3 increase from 10% to 25% is delayed.
November 30, 2018: In advance of G20, the USTR hints at more tariffs based on automobiles and labor rights.
November 13, 2018: Washington Post: Pence on China: “I don’t think it’s a matter of promises. We’re looking for results. We’re looking for a change of posture.”
Nov. 15, 2018 : WSJ article: Trump Forged His Ideas on Trade in the 1980s—and Never Deviated
November 13, 2018: Shanghai Trade Expo: Xi Jinpeng promises to open China’s markets.
October 10, 2018: Congressional-Executive Commission on China: Annual Report.
September, 21, 2018: CBP: CSMS #18-000554: Section 301 Trade Remedies Assessed on China; 3rd List of Products Subject to 301.
September 20, 2018: USTR: Federal Register publication of LIST 3 duties: effective 9/24.
September 18, 2018: USTR: Exclusion process for LIST 2. Deadline: December 18, 2018.
September 17, 2018: Whitehouse: Announces duties against $200 Billion in Chinese Goods (LIST 3). Effective date: September 24, 2018.
September 10, 2018: NYT: U.S. Weighs Sanctions Against Chinese Officials Over Muslim Detention Camps
August 24, 2018: USTR solicits public comment on China's compliance with WTO standards.
August 22, 2018: USTR extends comment period on List 3.
August 21, 2018: CBP: CSMS #18-000493: Update re: Section 301 Trade Remedies procedures.
August 20, 2018: American Association of Port Authorities (AAPA): Testimony in opposition to 301 tariffs.
August 19, 2018: ITC: publishes Year in Trade Report for 2017.
August 16, 2018: CBP: Announcement of "Safeguard" Informed Compliance publication to come at 2018 Trade Symposium in Atlanta.
August 15, 2018: USTR announces LIST 2 section 301 duties will be effective as of August 23, 2018.
August 15, 2018: Rumors abound possible LIST 4 action coming in advance or on heels of talks with China.
August 15, 2018: Telecommunications Industry Association: Opposes tariffs on networking equipment.
August 14, 2018: Forbes: Trump is Losing his Trade War
August 8, 2018: Peak Pegasus: A symbol of the trade war?
August 7, 2018: Commerce: Final List 2 announced. This represents $16 billion worth of imports from China that will be subject to a 25 percent additional tariff as part of the U.S. response to China’s unfair trade practices. (USTR kept 279 of the original 284 tariff lines.) The duties are effective on August 23.
August 6, 2018: USTR: review of Turkey’s GSP Eligibility announced (in Response to Retaliatory Tariffs)
August 4, 2018: List 3 comments deadline extended to September 5, 2018.
August 3, 2018: China promptly announces its tariff retaliation.
August 1, 2018: POTUS: List 3 increase proposed to 25% tariff rates.
July 11, 2018: USTR: Third list released. (the 6,000+ tariff lines are estimated to comprise $200 billion in inbound goods from China).
July 11, 2018: Senate rebukes POTUS trade war (88-to-11).
June 28, 2018: CBP: CSMS #18-000409: Section 301 Trade Remedies to be Assessed on Certain Products from China Effective July 6.
June 28, 2018: USTR: Voices rebuttal statement against retaliatory duties.
June 28, 2018: White House report cites "Chinese Economic aggression."
June 15, 2018: White House: Statement: U.S. will pursue additional duties to compensate for China's Retaliation.
June, 14, 2018: President gives green light to 301 tariffs on $50B Chinese goods; China vows a response in kind.
USTR issued LIST 1 representing the a final list of products against which duties will go into effect on July 6, 2018. (The list represents the reduction of the original proposed list based on comments received. 515 product lines were removed from the original 1,333 lines.)
A second proposed list (LIST 2) has been released containing 284 newly proposed tariff lines.
June 9, 2018: After G-7, Canada pledges to retaliate against the United States tariffs on steel and aluminum products in defense of Canadian workers, leading President Trump to issue 2 caustic tweets:
"Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!” Mr. Trump wrote."
“PM Justin Trudeau of Canada acted so meek and mild during our @g7 meetings, only to give a news conference after I left saying that, ‘US Tariffs were kind of insulting’ and he ‘will not be pushed around.’ Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!”
Meanwhile, despite the trade war, the National Retail Federation expects record imports (further exacerbating the trade deficit).
May 31, 2018: China cuts tariffs on 1,449 categories of goods from most favored nations will be reduced by an overall average of about 60 percent. China also announced a new negative list will be published by June 30 possibly reducing investment barriers.
May 30, 2018: Trilateral meeting: Japan, US, EU: Joint Statement against China's forced technology transfers and forced investments.
May 29, 2018: POTUS: White House Statement: Section 301 tariffs to be finalized, despite US-China discussions.
May 19, 2018: United States and China: Joint Statement Regarding Trade Consultations
April 23, 2018: Customs: CSMS #18-000301: Allows CBP 300 days to reject entries subject to sec. 232 & sec. 301.
April 12, 2018: POTUS proposes rejoining TPP.
April 11, 2018: Senator Grassley (R-Iowa) quote following trip to China: [China] “will do anything legal or illegal, moral or immoral, ethical or unethical ... to get ahead and stay ahead.” Lawmakers calling for TPP and NAFTA as bulwarks.
April 6, 2018: POTUS: Statement on China Trade War: directing USTR to look at additional tariffs and to plan for the protection of US industry (farmers).
April 5, 2018: Reuters: China tariffs to go into effect Monday.
April 3, 2018: USTR Notice of Determination and Request for Public Comment re: Section 301 List of Products against which duties may be applied.
March 22, 2018, POTUS: Memorandum announces the section 301 process.
August 24, 2017: USTR announces a section 301 investigation on China's practices on Technology Transfer, Intellectual Property, and Innovation.
August 14, 2017: POTUS: Memorandum calling for section 301 investigation.
April 2011: Trump: statement that as president, he would tell Beijing: “Listen, you motherf—ers, we’re going to tax you 25%!”