The Trade Act of 1974 promotes the development of an open, nondiscriminatory, and fair world economic system to stimulate fair and free competition internationally and to foster the economic growth of and employment in the United States. Concerns by the United States Trade Representative (USTR) regarding the Government of China’s practices initiated an investigation in terms of Section 301 on August 18, 2017. In a notice published on April 6, 2018 (83 FR 14906), the USTR announced that the acts, policies, and practices of the Government of China are indeed unreasonable, discriminatory, and burden or restrict U.S. commerce.

Section 301 Battle Lines

The first salvo in the looming trade war between the US and China was fired on July 6, 2018, when the USTR implemented an additional 25% duty on certain Chinese imports. 818 products, which contain “industrially significant technologies”, are, therefore, now subject to the new punitive tariffs.

This, however, was not the end of it. On June 15, 2018, the USTR announced that a further list of 284 additional subheadings (worth $16 billion) would also be subject to an additional 25% tariff. Almost all of these tariffs went into effect on August 23rd. (The finalized list of affected tariffs can be found here.)

Recently, a third list was released. It contained 6,031 items that may be subjected to 10% (or possibly 25%) additional duties,valued at $200 billion. Hearings and the comment period closed on September 6, so it is likely that the duties may go into effect in September, or later.

Survival Strategies

Here are a few suggestions on how to survive the punitive Chinese tariffs:

  • File For An Exclusion
    The USTR has not yet published anything about the standard that they will use for making an exclusion determination. Therefore, you may certainly entertain justifiable reasons for opposing the proposed tariffs with regards the finalized lists. You can:
    ✓ Oppose inclusion of HTSUS classifications in tariff lists
    ✓ Seek exclusion of specific products from additional duties
  • Review Your Product Classification
    Not all classifications are black and white: there may be many gray areas. Review your classification of products, especially with consideration to some binding rulings that are on file.
  • Review your Product Designs
    A very small change in the design of your product may be all that you need in terms of a legal alternative to the unanticipated tariffs.
  • Consider Alternative Supply Chains
    As China is the primary country under “fairness” scrutiny, a solution could be to source your product from another country, thus escaping the additional tariffs.
  • Drawback
    You may mitigate your losses by claiming a duty drawback. Even if your product/commodity is included in the finalized list, you are still entitled to duty drawback.

Why J.M. Rodgers Co., Inc.?

Considering that the Government of China has responded to the Section 301 tariffs by imposing retaliatory tariffs on U.S. goods, the prospect for an amicable solution does not look good. You will no doubt need expert help to offset the negative impact the additional Chinese tariffs will have on your business. Established in 1952, J.M. Rodgers Co., Inc. is a family-owned and operated Customs House Brokerage and Freight Forwarding firm with a specialty in Duty Drawback. Let us review your product classifications, identify solutions, and maximize your refund potential by unearthing all possible opportunities and acting upon them quickly, accurately and efficiently. Give us a call today.

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