Oct 2019

New Round of US-China Tariff Exclusions Opens on Halloween, Deadline of January 31, 2020

The U.S. Trade Representative raised the stakes in the U.S. – China Trade war in August 2019 by imposing a fourth round of tariffs (ad valorem duty) on China-origin goods imported into the US, effective September 2019 and December 2019 (“August 2019 Action”).

This action will subject $300 billion worth of U.S. imported products annually to new tariffs using the same legal weapon wielded by the USTR in previous actions, section 301 of the Trade Act of 1974.

Earlier this week, the USTR published the formal process under which U.S. interested parties may seek an exclusion from the new tariffs effective September 2019.

Earp Cohn has worked with various companies, customs brokers, individuals, and public officials to advise on, prepare, and submit exclusion applications under prior exclusion rounds, and we may be able to help you.

The August 2019 Action originally set the tariffs at 10%, but shortly thereafter, at the specific direction of President Trump, the tariffs increased to 15% as a result of perceived retaliatory action by China. Other tariffs under separate USTR actions have jumped to 30%.

The United States Trade Representative will open another round of tariff exclusions starting on October 31, 2019, and closing on January 31, 2020. During this period, parties may file applications for exclusion from tariffs. After January 31, there may be no further opportunities to obtain relief.

A successful application results in exclusion from future tariffs and a potential full refund of all tariffs paid under the August 2019 Action, applying retroactively. All applicants should seek legal counsel relating to various correlative actions necessary to preserve all rights such as delaying liquidation of customs clearance and working closely with their brokers.

We have experience with and can hit the ground running to assist you with this entire process, start to finish, including:

1.           Advising on proper HTSUS codes to avoid tariffs or to ensure reimbursement of tariffs;
2.          Research and analysis of CBP Rulings;
3.          Advising on the process to amend HTSUS codes after customs clearance, liquidation timeframes, and related protests;
4.          Advising on ongoing USTR tariff actions and modifications;
5.          Advising on the exclusion process and strategy;
6.          Reaching out to local public officials and industry groups for supports and drafting letters of support;
7.          Advising on potential litigation between importers and US purchasers relating to the potential reimbursement of tariffs paid and how to avoid such litigation;
8.          Preparing and submitting exclusion applications;
9.          Preparing assignment of rights agreements and cost/risk sharing within the supply chain to avoid litigation later in the event an exclusion is granted;
10.        Monitoring exclusion requests submitted by competitors of our clients to comment and respond;
11.         Monitoring the regulations daily to advise on any changes that may affect sales contracts;
12.        Revising and editing purchase order and acknowledgment terms to insert language to shift risk relating to the ongoing uncertainty of tariffs;
13.        Negotiating with foreign suppliers.

Please contact your Earp Cohn lawyer or a member of our International Law practice group for help with the process.