Industry News

Section 301 List 3 increases to 25%

Section 301 List 3 increases to 25%

It was announced on May 5, 2019 that an additional 25% tax for the third tranche of Section 301 tariffs, also known as List 3, would go into effect on May 10, 2019, and that effective date is now official….. However, with one change. The USTR has added additional verbiage that allows importers to pay 10% instead of 25% for a limited time based on when the shipment exported from China.

Section 301

Any imports from China that export on or after May 10

Any Chinese export destined to the United States on or after May 10, 2019 is subject to an additional 25% tariff rate.  What is considered the “export date” (ie. sailing date, berthing date) is still unconfirmed, but will most likely be pulled from the date of sailing in AMS. HTS number for these imports are still 9903.88.03 and 9903.88.04.

Any imports from China that export before May 10 

The limited time frame applicable to 10% mentioned above is applied to any Chinese export destined for the United States before May 10, 2019, but also entered for consumption before June 1, 2019.  These shipments will still incur the 10% additional tariff rate using a new HTS #9903.88.09, which indicates to U.S. Customs that the shipment falls into this specific scenario.  In other words, if a U.S. import went into consumption between May 10 – June 1, 2019 but was also exported before May 10, it will only incur the 10% increase in duty.

Any imports from China that enter on June 1 and after

The subject imports of China that are entered into the United States on or after June 1, 2019 are subject to the 25 percent rate of additional duty under HTS 9903.88.03 and 9903.88.04.

Country of Origin

The Section 301 duties only apply to products of China, and are based on the country of origin, not country of export.

Duty Savings 

If the Section 301 tariffs are affecting your company, watch this webinar recording to learn more.  Scarbrough’s President and COO, Adam Hill, along with Patrick Caulfield, an attorney at GDLSK, an international trade and customs law firm, talk about legal opportunities to recover or avoid paying duty to CBP.  This is an interactive webinar set up as a question/answer forum.

Consulting

If you feel the need to talk to someone sooner, Scarbrough Consulting, Inc. is offering a free 20-minute consultation.  If you are interested in taking advantage, please email consulting@scarbrough-intl.com.  Furthermore, if you would like to speak with an international trade attorney, Patrick Caulfield with GDLSK is also available.  You can email him at PCaulfield@GDLSK.COM.

 

View the full text from U.S. Customs below:

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BACKGROUND:

On August 18, 2017, the Office of the United States Trade Representative (USTR) 
initiated an investigation under Section 301 of the Trade Act of 1974 into the government of China’s acts, policies, and practices related to technology 
transfer, intellectual property, and innovation.  On June 20, 2018, the USTR published a Notice of Action and Request for Public Comment Concerning 
Proposed Determination of Action Pursuant to Section 301(83 Federal Register (FR) 28710), imposing additional import duties on a list of Chinese products.  
On August 16, 2018, the USTR published a Notice of Action (83 FR 40823) providing for the imposition of additional import duties on a second list of Chinese 
Products.

On September 21, 2018, the USTR published a Notice of Modification of Action in the Section 301(83 FR 47974) investigation providing for the imposition 
of additional import duties on over 5,700 full and partial eight-digit subheadings of the Harmonized Tariff Schedule of the United States (HTSUS) on goods 
imported from the People’s Republic of China (China).  The September 21, 2018 list of products can be found in Annex A to the USTR’s September 21, 2018 
Notice, and was amended on September 28, 2018 (83 FR 49153).  The rate of additional duties was initially 10 percent and the duties were effective starting 
on September 24, 2018.  The duty rate on these imports was originally scheduled to increase to 25 percent, but the increase was subsequently postponed. 

On May 9, 2019, USTR published a Notice of Modification of Action (84 FR 20459) in the Section 301 investigation increasing the duty rate to 25 percent 
on imports from China on the over 5,700 full and partial eight-digit subheadings of the HTSUS listed in Annex A to the USTR’s September 21, 2018 Notice, 
as amended.  USTR will also shortly publish a Federal Register Notice announcing the duty rate for such imports exported before May 10, 2019.

GUIDANCE:
The increase in additional import duties for Chinese goods covered by the September 21, 2018 Federal Register notice, as amended, 
is now effective on May 10, 2019.  Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, 
on or after 12:01 a.m. eastern standard time on May 10, 2019, and exported to the United States on or after May 10, 2019, the rate of additional duties on 
imported articles classified in a subheading covered by the September 21, 2018 Federal Register notice, as amended, will be 25 percent ad valorem.

For subject goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on May 10, 2019, 
and exported to the United States on or after May 10, 2019, report the following HTS numbers and duty rates: 

HTS: 9903.88.03 and 9903.88.04
Duty Rate: 25 percent  
                                
For subject goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on May 10, 2019, 
and before June 1, 2019, and exported to the United States before May 10, 2019, report the following HTS number and duty rate:

HTS: 9903.88.09
Duty Rate: 10 percent  

The subject imports of China that are entered into the United States on or after June 1, 2019 are subject to the 25 percent rate of additional duty 
under HTS 9903.88.03 and 9903.88.04.

The Section 301 duties only apply to products of China, and are based on the country of origin, not country of export. 

FOR FURTHER INFORMATION:
For further information, please refer to the USTR’s web site at USTR.gov and the Federal Register for official announcements on this matter.
Questions related to Section 301 entry filing requirements should be emailed to traderemedy@cbp.dhs.gov. 
Questions from the importing community concerning ACE rejections should be referred to their Client Representative.

 

 

Background

On August 18, 2017, USTR initiated an investigation into certain acts, policies and practices of the Government of China related to technology transfer, intellectual property and innovation (82 FR 40213). During the investigation, the Trade Representative determined that the acts, policies and practices of China under investigation are unreasonable or discriminatory and burden or restrict U.S. commerce, and are thus actionable under Section 301(b) of the Trade Act of 1974, as amended (Trade Act).

In response, President Trump initiated a number of actions which imposed ad valorem tariffs on certain imports originating in China.  Four separate lists have been announced.  To view the most up to date information, check out our debriefing on Section 301 Imports from China.  This post indicates effective dates, duty rates, and more.

What to do

Scarbrough Consulting, Inc. is offering a free 30-minute consultation to any company that may be affected by the Section 301 announcements.  Please send an email to consulting@scarbrough-intl.com or fill out the form below.  Our Global Trade Experts and Licensed Customs brokers are here to help.

Other ways to Learn More about Duty Savings

If the Section 301 tariffs are affecting your company, watch this webinar recording to learn more.  Scarbrough’s President and COO, Adam Hill, along with Patrick Caulfield, an attorney at GDLSK, an international trade and customs law firm, talk about legal opportunities to recover or avoid paying duty to CBP.  This is an interactive webinar set up as a question/answer forum.


Resources

To review Section 301, visit this helpful Resource Page

To read more about Section 301, visit USTR.gov

Download each Section 301 List below:

View List 4a Effective Sept 1

View List 4b Effective Dec 15


Section 301 List 1
Section 301 List 2 Section 301 List 3

 

 

 

 

 

Consulting

Scarbrough is offering a FREE 20-minute consultation to any importer affected by the Section 301 Tariffs. Email consulting@scarbrough-intl.com or fill out the form below.

Consulting Request

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