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July 07, 2020

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July 06, 2020

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Three Important Opportunities for Businesses in the Midst of the Tariff War

1. Take Advantage of List 4 Tariff Exclusion Requests

Although the deadline for submitting List 3 tariff exclusion requests expired on September 30, 2019, it is not time to stop thinking about tariffs and exclusion requests. The latest Section 301 tariffs are imposed at a 15 percent rate and cover $300 billion dollars of products imported from China. The products covered by this new tariff action are listed on the newly released List 4. The List 4 products are divided into two separate tranches: List 4A tariffs became effective on September 1, 2019 and the List 4B tariffs will take effect on December 15, 2019.

Like the tariffs imposed on List 1, 2 and 3 products, the office of the U.S. Trade Representative (USTR) announced on October 31, 2019 that it will begin accepting tariff exclusion requests for the Chinese imports subject to List 4A tariffs. These tariff exclusion requests need to be submitted through an electronic portal and will be reviewed on a case-by-case basis. Each exclusion request submitted will involve the provision of a significant amount of company data and explanation as to the rationale for the request. As was the case with prior lists, companies seeking exclusion requests for their products must submit one exclusion request per product; however, a single product may include two or more goods with similar product characteristics or attributes. The last day for submitting exclusion requests from List 4A Section 301 tariffs is January 31, 2020. Any exclusion request granted is effective for one year, starting from the September 1, 2019 effective date.

2. Provide Comments to the USTR on List 1 Tariffs

For those fortunate parties whose exclusion requests were granted in December 2018 with respect to List 1's 25 percent tariffs, time is now running out. Generally, these exclusions applied retroactive to the first date on which the tariff was applicable until one year from the date of publication of the granted exclusion request in the Federal Register. Consequently, exclusions granted in December 2018 will be expiring on December 28, 2019. However, it appears that the USTR is contemplating providing some relief from the expiry of these exclusions. The USTR has opened up public comment on whether to extend prior exclusions that were granted in December 2018 for another year. Comments were welcomed starting on November 1 and can be made until November 30, 2019 through the Federal eRulemaking Portal: http://www.regulations.gov, docket #USTR-2019-0019.

Comments are submitted on two forms – one solicits general information and one solicits business confidential information. According to the USTR, evaluation will focus on whether, despite the first imposition of these additional duties in July 2018, the particular product remains available only from China. Commentators also should plan to address harm to U.S. interests if the extension is not granted, changes to global supply chains, and efforts that U.S. importers and purchasers have made since July 2018 to source the product from outside of China.

3. Monitor Your Competitors' Exclusion Requests

If you did not file an exclusion request but have goods covered by a Section 301 tariff, or if you filed an exclusion request that was denied, there is reason to hope. The government is still granting exclusion requests for goods on various Lists. Even if you did not submit an exclusion request or if your exclusion request for a product was formally denied, if another party's exclusion request was granted on either a product or HTS Code basis and this is applicable to your products, you may still file for a refund of tariffs paid. In particular, product exclusions are available for any product that meets the description in the relevant annex to Federal Register notice, regardless of whether the importer filed an exclusion request. Because of this, it is important to be vigilant when checking the government's lists of granted exclusion requests published as part of the Federal Register to see if anything applies to you.

© 2020 Varnum LLPNational Law Review, Volume IX, Number 316


About this Author

Katie K. Roskam, Michigan, tax attorne

Katie is an associate in the firm’s tax practice team. She focuses on federal income tax matters for both foreign and domestic clients and issues pertaining to employee benefits and executive compensation. Katie's previous work experience includes researching and writing appellate briefs while clerking at Even & Franks PLLC in Muskegon for several summers. She also worked as a tax research assistant at Loyola University School of Law. She served as an extern for Judge Ronald A. Guzman in U.S. District Court for the Northern District of Illinois and has worked as an...

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