Section 301 — Increase in US Duties on List 3 and Exclusion Process

Further to the below, attached is an advanced copy of the notice announcing that the 10% duty on articles included on List 3 will increase to 25%.  2019-09681  The notice also announces that, as promised, now that the duty rate is going to 25%, the U.S. Trade Representative will establish a product exclusion process for articles on List 3 (like has been done for articles included on Lists 1 and 2).  The notice is scheduled to be published in tomorrow’s Federal Register.

 Interestingly, there appears to be some wiggle room on the effective date for the duty increase.  The notice contains multiple references to the 25% rate becoming effective this Friday, May 10, 2019.  For example, the notice states:

The Annex to this notice amends the Harmonized Tariff Schedule of the Unites to provide that the rate of additional duties for the September 2018 action [i.e., List 3] will increase to 25 percent on May 10, 2019.

 The Annex (unlike previous Federal Register notices imposing the Section 301 duties), however, includes two separate conditions for the increase in duties to take effect.  Specifically, it states:

Effective with respect to goods (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States is modified . . . .

As a result, it appears that in order for the 25% duty rate to apply, the imported merchandise must be entered for consumption after 12:01 am ET Friday morning AND have been exported to the United States on or after Friday, May 10th.  So, an entry of merchandise included on List 3 exported from China prior to May 10th would not be subject to the 25% duty rate even if it was entered after 12:01 am Friday (it would still be subject to the 10% rate). 

 While this will likely be a welcome accommodation to companies with shipments on the water, it may lead to some confusion at the border.  Presumably, U.S. Customs and Border Protection will issue further guidance on the type of proof needed to demonstrate that a given shipment was exported to the United States before May 10, 2019 (e.g., bills of lading, etc.).


If you have any questions about these issues, please let us know.



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