China Tariff – 301 Update

Written by Susan Kohn Ross

In discussing the current state of the 301 tariffs, the first place to start is with the pending litigation. There, the Government has filed its cross-motion to dismiss responding to what plaintiffs had previously argued. The next step is for the panel of judges assigned to these 3800+ cases to decide if they will order oral argument or decide the case on the filings. That is not yet clear, although the expectation is oral argument will be ordered.  Regardless, once the decision is issued, the likely next step is an appeal by the losing side to the Court of Appeal for the Federal Circuit. So, stay tuned!

At the same time, industry has put a good deal of pressure on the Biden Administration to reinstate the exclusion process and to more broadly explain how it intends to interact with China.  On October 4, 2021, the Biden Administration issued a fact sheet regarding trade with China outlining its basic policies and goals. A copy can be found here. Of broad interest to the trade community is an comment that the 301 exclusion process will reopen, even while no further details are available for now.

Further teeing up the topic was a speech by USTR Tai on the same day.  A transcript of her prepared remarks can be found here.

Those remarks were followed a few days later, on October 8, 2021, by a notice issued by USTR inviting comments about the possible reinstatement of exclusions for a list of 549 products/tariff numbers, see here. The portal in which to file those comments is now open, but closes on December 1, 2021. If your tariff number is listed and the product you are importing closely approximates the product described, where relevant, you may file comments. Given the financial impact of the 301 tariffs, it is reasonable to anticipate that any company which is eligible will want to file comments.

USTR has said those comments should focus on:

  1. Whether the particular product and/or a comparable product is available from sources in the U.S. and/or in third countries;
  2. Any changes in the global supply chain since September 2018 with respect to the particular product or any other relevant industry developments;
  3. The efforts, if any, the importers or U.S. purchasers have undertaken since September 2018 to source the product from the U.S. or third countries; and
  4. Domestic capacity for producing the product in the U.S.

In reaching its decision, USTR stated it will consider “whether or not reinstating the exclusion will impact or result in severe economic harm to the commenter or other U.S. interests, including the impact on small business, employment, manufacturing output, and critical supply chains in the U.S., as well as the overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies and practices covered in the Section 301 investigation.” That investigation focused on China’s actions regarding “technology transfer, intellectual property, and innovation.”

In reaching its decision, USTR stated it will also consult with the agencies that make up the Section 301 Committee, “including the Small Business Administration.”

Any exclusions which are reinstated will be retroactive to October 12, 2021 and refund claims will need to be filed with CBP accordingly.

The form to be used can be found here.

The 549 tariff numbers can be found here.

Finally, we are seeing preliminary activity moving in the right direction – some form of relief from those onerous 301 tariffs. It cannot come soon enough!

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