U.S. Trade Representative Grants First Round of Product Exclusions for U.S. Imports from China Subject to Section 301 25 Percent Tariff

On December 21, 2018, the Office of the U.S. Trade Representative (USTR) announced its first round of product exclusions for U.S. imports from China receiving a 25 percent tariff increase on July 6, 2018, as part of the Section 301 process. In a December 28, 2018 Federal Register notice, the USTR announced that it will modify the Harmonized Tariff Schedule (HTS) to grant nearly 1,000 product exclusion requests. As set out in the annex to the notice, the exclusions are established in two different formats: (1) as an exclusion of an existing 10-digit subheading from within an 8-digit subheading included in the scope of the initial Section 301 action, which covered $34 billion worth of U.S. imports of Chinese products, or (2) as an exclusion reflected in specially prepared product descriptions. The USTR notes that the exclusions take the form of seven 10-digit HTSUS subheadings and 24 specially prepared product descriptions. The exclusions are available for any product satisfying the description in the annex, regardless of whether the importer filed an exclusion request. These exclusions will be applied retroactively to July 6, 2018 and will be effective for one year from December 28, 2018.

These HTS subheadings will be fully exempt from the 25 percent tariff applied on imports from China under Section 301: 8412.21.0075, 8418.69.0120, 8480.71.8045, 8482.10.5044, 8482.10.5048, 8482.10.5052 and 8525.60.1010. These subheadings cover certain hydraulic power engines, drinking water coolers, injection molds, radial bearings and CB radio transceivers. The USTR also created partial exemptions for certain products under other HTS subheadings satisfying the additional requirements of the specific product descriptions included in the annex to the notice.

While U.S. Customs and Border Protection (CBP) must issue instructions on entry guidance and implementation, CBP posted a message on December 31, 2018, noting that such instructions will be issued once the partial government shutdown is over. Any updates to the Automated Customs Environment (ACE) will be implemented 10 business days after the shutdown has concluded. Until these updates are completed, entry and entry summaries must be submitted without the Chapter 99 product exclusion number referenced in the USTR notice granting the exclusions for certain products. Entry and entry summaries will be rejected by ACE if the Chapter 99 product exclusion number the USTR referenced is currently transmitted. Once CBP issues guidance and implements ACE enhancements, a Post Summary Correction (PSC) or a Protest may be submitted for a refund.