 Most China Tariff Exclusions for List 4 Goods Expiring; First Sale Can Help Mitigate Effects |
Source |
American Shipper |
Post Date |
09/01/2020 |
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Hundreds of products imported from China will become subject to the Section 301 additional 7.5 tariff on List 4A goods when their exclusions expire Sept. 1. Exclusions are being exted for less than 100 products but those extensions are only valid through Dec. 31. Importers of goods that will now be subject to this tariff should consider using the first sale rule to mitigate its impact.
Tariff Exclusion Decisions
The Office of the U.S. Trade Representative considered exting eight sets of tariff exclusions covering hundreds of List 4A goods from China. However, USTR has declined to ext most of these exclusions, meaning those goods will be subject to the 7.5 percent tariff as of Sept. 1.
USTR did approve extensions of 87 exclusions, including 14 individual HTSUS numbers and 73 specifically-described products. These exclusions, which must be claimed using new HTSUS 9903.88.57, are available for any product that meets the specified product description, regardless of whether the importer filed an exclusion request.
However, while USTR said it would consider exting these exclusions for up to 12 months, it ultimately only exted them through Dec. 31. USTR states that this shortened extension is due to ˇ°the cumulative effect of current and possible future exclusions or extensions of exclusions on the effectiveness ofˇ± the Section 301 tariffs. USTR explains that it has granted more than 6,800 exclusion requests to date, has exted some of these exclusions, and may consider further extensions. USTR states that it will take account of the cumulative effect of exclusions in considering the possible further extension of these and other exclusions.
First Sale Rule
Under the first sale rule, the dutiable value of a qualifying transaction may be based on the purchase price between the middleman/vor and the manufacturer rather than the price paid by the importer to the middleman/vor, resulting in a lower duty bill. First sale has long been useful to industries subject to high U.S. tariffs, such as apparel and footwear, which use it to save millions of dollars in import duties each year.
However, utilization of the first sale rule has increased dramatically over the past few years as companies seek to lessen the impact of the Section 301 tariffs on imports from China; Section 201 and 232 tariffs on steel, aluminum, and other products; and tariffs on European Union goods imposed in a long-running World Trade Organization dispute on aircraft subsidies. Additional tariffs also remain a possibility on imports from EU countries (due to their proposed digital services taxes) and automobiles and auto parts from many countries (following a Section 232 national security investigation).
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