On May 8, 2019, the U.S. Trade Representative (“USTR”) announced that Section 301 tariffs on Chinese imports worth $200 billion would increase from 10% to 25%. This action took effect on May 10, 2019.
On May 13, 2019, the USTR announced that at the President’s direction, the agency is considering imposing an additional tariff of up to 25% on a new list of Chinese imports worth $300 billion. The USTR has requested public comments and will conduct a public hearing on June 17, 2019. Requests to give testimony are due by June 10 and written comments are due by June 17.
As our previous briefings describe, Section 301 tariffs on products imported from China have been enacted in three waves, taking effect in July, August, and September 2018, respectively. The third wave, List 3, represents the largest amount of goods and was initially set at a 10% tariff rate, scheduled to increase to 25% in January 2019. Due to favorable negotiations with China, the Administration postponed the scheduled increase for several months. However, due to a recent slowdown in negotiations, the USTR has increased the existing tariff on List 3 and is considering an additional tariff on List 4, which represents $300 billion worth of products including clothing, electronics, metal alloys, foods, beverages, and sporting equipment.
As we eagerly await an exclusion request process to assist clients in navigating these tariffs, the USTR confirmed on May 8 that it “will establish a process by which interested persons may request that particular products classified within an HTSUS subheading covered by the September 2018 action be excluded from the additional duties.” This process for List 3 exclusion requests will likely be similar to the exclusion request processes for products on List 1 and List 2, some of which have been granted. However, the USTR may take longer to consider these requests, given that the amount of products on List 3 is larger than previous lists. The USTR “will publish a separate notice describing the product exclusion process, including the procedures for submitting exclusion requests, and an opportunity for interested persons to submit oppositions to a request.” It is unclear whether an exclusion request process will be released for the proposed List 4 items, if and when it comes into force.
Clients currently importing products or parts from China should take note that the 25% tariffs will only affect List 3 products leaving China as of May 10 or later, not those that were already en route to the U.S when the tariff increase took effect. For products en route to the U.S. as of May 10, the tariff remains at 10% as long as these products enter the U.S. by June 1, 2019.
If you seek to file an exclusion request once the process is announced for List 3, if you would like assistance in filing public comments regarding List 4, or if you have other questions regarding these complex matters, we recommend seeking the guidance of counsel. Please contact any of the attorneys listed below or your usual Winston & Strawn LLP contact for assistance.