Many industries are staring at a large increase in their product costs this week, as the first wave of temporary exclusions is set to expire on Friday, with an additional group of them set to expire in later September. Thus far there has been no indication that the government will be extending any exclusions- and importers will be stuck on the hook for these increases.
When section 301 duties were first put into place in 2018, there was some allowance for certain industries to request and receive specific exclusions on their products. If approved, it meant that certain products and importers could continue to receive duty-free or low duty treatment. The exclusions were built-in with an expiration date, with its renewal entirely up to authorities.
With this expiration, companies now seeing this increase will have little recourse and will need to pay the 15% or 25% imposed duties. Until section 301 duties are rescinded, something that does not seem likely in the short term, all importers will bear the full brunt of these tariffs. The first wave from list 3 expire this week, August 7th, with list 4A expiring on September 1st, list 1 expiring September 20th, and list 2 on October 2nd.
The increases will potentially cost US importers hundreds of millions, and so any company being hit by these section 301 duties need to take a close look at their eligibility for duty drawback refunds. Duty drawback has been enshrined in US law since 1789 and will be around well into the future. In its time, it has been expanded to allow any industry involved in import or export to take advantage of the refund process.
Any new duty drawback program involved the first approval of certain applications and rulings, and so any firm that wants to be able to take advantage of this refund program should be immediately investigating their ability to support such a program. Importers and exporters are eligible to receive up to 99% of the duties paid on exported products, and all section 301 duties- which include not just those from China, but new and proposed duties on European imports- are eligible to be refunded under this program.
JM Rodgers has been a leader in duty drawback for more than 60 years and can help anyone determine what kind of refunds they would be due back. If your company is being hit with new tariffs and you’d like to discuss your company’s potential to reduce costs via drawback refunds, please contact us at www.jmrodgers.com
James Rodgers CEO