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Imports From Hong Kong May Soon Face Section 301 Tariffs

On Tuesday, August 11, U.S. Customs and Border Protection (“CBP”) is scheduled to publish a notice in the Federal Register that could end the ability of manufacturers based in the Hong Kong Special Administrative Region (“Hong Kong”) of the People’s Republic of China (“China”) to avoid the tariffs imposed on Chinese products by the Trump Administration.

In 2018, an investigation led by the Office of the U.S. Trade Representative (“USTR”) under the authority of Section 301 of the Trade Act of 1974 found that China’s policies on intellectual property, technology, and innovation were causing harm to the U.S. economy. As a result, the Trump Administration imposed several rounds of tariffs on imports into the United States of Chinese products. These tariffs range from 7.5-25% and cover over US$350 billion worth of products.

Notably, the Section 301 tariffs only apply to products that have a country of origin of China. As the following “Frequently Asked Question” from CBP explains, products originating from Hong Kong have not been subject to the increased tariffs:

Are products of Hong Kong subject to the additional Section 301 duties?

At this time, the additional duties imposed by the Section 301 remedy only apply to articles that are products of the People’s Republic of China (ISO Country Code CN). Imported goods that are legitimately the product of Hong Kong (HK) or Macau (MO) are not subject to the additional Section 301 duties. Please note that Section 301 duties are based on country of origin, not country of export.[1]

However, a CBP Federal Register notice published on August 11 will change the ability to claim that an import has Hong Kong as its country of origin. U.S. law provides that, unless excepted, every article of foreign origin (or its container) imported into the United States must be marked with the country of origin of the article.[2] The August 11 notice says:

[T]his document notifies the public that, unless excepted from marking, goods produced in Hong Kong, which are entered or withdrawn from warehouse for consumption into the United States after [45 days from publication], must be marked to indicate that their origin is “China” for purposes of 19 U.S.C. 1304.”

Although not entirely clear, the action appears to bar future imports from Hong Kong into the United States as being declared products of Hong Kong, thus likely subjecting those imported products to the same supplemental tariffs presently applicable to many imports from China.

We expect the Trump Administration, perhaps CBP, the U.S. International Trade Commission, or the USTR, to provide more details in the coming days.

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[1] “Section 301 Trade Remedies Frequently Asked Questions,” U.S. Customs and Border Protection (last accessed August 10, 2020).

[2] 19 U.S.C. 1304.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 224

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