Options For Avoiding Section 301 Duties On Chinese-Origin Goods

In Short

The Situation: The U.S. government has imposed additional 25 percent duties on two sets of Chinese-origin goods, will shortly impose additional 10 to 25 percent duties on another set of Chinese-origin goods, and is considering imposing additional duties on more Chinese-origin products under Section 301.

The Developments: There are a number of options that companies can employ to avoid paying the Section 301 duties, including product exclusion requests, changing the tariff classification and country of origin of Chinese-origin products imported into the United States, and duty deferral or elimination programs.

The Impact: Companies should explore how they might avoid paying the Section 301 duties.

The U.S. government imposed additional 25 percent duties on imports of Chinese-origin products classified under Harmonized Tariff Schedule of the United States ("HTSUS") subheadings included on two lists ("List 1" and "List 2") published by the U.S. Trade Representative ("USTR") on July 6 and August 23. These additional duties, which were imposed pursuant to Section 301 of the Trade Act of 1974 ("Section 301"), target approximately $50 billion worth of Chinese-origin products imported into the United States.

In addition to List 1 and List 2, the administration is considering imposing additional 10 to 25 percent duties on a third list ("List 3") of HTSUS subheadings covering approximately $200 billion worth of Chinese-origin products. The notice and comment period associated with List 3 (which resulted in over 5,000 comments and submissions received on the docket from over 350 companies) ended on September 6. We expect a final announcement from the administration in the coming weeks with duties becoming effective shortly thereafter. Further, President Trump has signaled that he is ready to impose additional duties on the remaining approximately $267 billion worth of Chinese-origin products imported into the United States annually pursuant to Section 301.

While it is unclear whether Section 301 duties will be imposed on all imports of Chinese-origin products or how long these duties will remain in place, companies should explore how they might avoid paying the duties, as discussed below. Companies must ensure that they understand and comply with the noted requirements and restrictions for each option.

  1. Product Exclusion Request

    On a company-specific, product-specific basis, companies may request that Chinese-origin products be excluded from...

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