UPDATE: 05/10/2019
Customs confirmed yesterday that Section 301 List 3 tariffs will rise to 25%. However, the new 25% rate will only apply to goods which were exported on or after 12:01 a.m. on May 10th; goods which were exported prior to that date and time will still be subject to the current 10% List 3 rate, even if they’re entered after 12:01 a.m. on May 10th.
The difference in tariff rates may lead to some confusion when making entry in the next several days. Customs has stated that importers entering goods which are not subject to the new rate can pay the 25% tariff, and then file a post summary correction to obtain a refund of the excess 15% paid; alternatively, Customs has stated that importers may choose to delay filing their entry summary to allow Customs time to issue additional instructions, so long as they file their entry summary within the standard 10 day filing period. We recommend that importers work closely with their brokers on these issues.
In addition, the USTR has announced that it will be setting up a process to apply for exclusions from the new 25% tariffs. It will provide further details (including the application deadline date) shortly.
Although the List 3 rate will now rise to 25%, it’s unclear how long these tariffs will remain in place, as negotiations between the US and China to resolve the trade war are continuing. We will continue to monitor this situation, and will report all significant developments.
Original: 05/08/2019
President Trump tweeted earlier this week his disappointment with the lack of progress in the negotiations with China and China’s retreat from previous commitments agreed to in earlier negotiation rounds. In response to these developments, the U.S. Trade Representative (“USTR”) is scheduled to announce on May 9, 2019 that the current 10 percent tariff on Section 301 “List 3” products will rise to 25 percent as of 12:01 a.m. on Friday May 10th. An advance copy of the USTR’s announcement is available here.
The new rate of 25% would apply to goods covered by List 3 that are (1) entered for consumption or withdrawn from warehouse for consumption on or after Friday, May 10, 2019 AND (2) exported to the United States on or after May 10, 2019 at 12:01 a.m. EST. Thus, goods covered by List 3 and exported from China prior to May 10, 2019 would be exempt from the 15% duty increase, even if they are entered on or after May 10, 2019. This gives some relief to importers whose goods are presently in transit to the United States.
In addition, USTR stated that if the rise to 25% percent duties occurs, it will be establishing a process for U.S. companies to apply for an exclusion of List 3 products from the Section 301 duties. The procedures for requesting List 3 exclusions will be issued in a separate notice, although no firm date has been mentioned by USTR as to when the exclusion process will be rolled out. Based on past practice, we expect that any exclusions would be retroactive, and would remain in place for one year after the exclusion determination is published.
At this point, we are unable to predict with any certainty whether the rise in List 3 tariffs to 25% will actually occur on Friday (or at all). The Chinese trade delegation is due to meet with U.S. trade negotiators in Washington on Thursday, and the negotiations may lead to a cancellation or delay in the projected tariff increase.
We will continue to monitor this situation closely. If you have any questions about this action or are interested in obtaining further information about the exclusion process, please contact us at contact@fdaimports.com today.
