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Regulations regarding the 301 tariff exclusion extensions continue to undergo regular evaluations from the U.S. Trade Representative. If your business has benefited from these tax breaks, staying updated on their use is paramount.
Key Takeaways:
In this article, we will discuss which exclusions have been reinstated, removed, or extended and how you can obtain a 301 refund if your products apply.
After the conclusion of the USTR’s four-year review of the current tariffs assigned to products from China under Section 301, several announcements regarding current exclusions were made.
I’ll organize these by date and focus on the details that have to do with tariff exclusions.
September 13, 2024
Fourteen HTS codes related to solar panel manufacturing now have temporary exclusions in place. Importers with shipments matching the description and HTS code provided in Annex B of the USTR release can claim these exemptions retroactively.
The valid period to import or apply for a Section 301 refund extends from January 1, 2024 until May 31, 2025.
An exclusions process for machinery imports has yet to be finalized, but should cover 320 HTS subheadings found under chapters 84 and 85 of the HTSUS. These are listed in Annex E of the same USTR release.
May 14, 2024
The current USTR ambassador, with direction from the Biden administration, is making the following recommendations:
Shortly after, an official announcement was made that the USTR is accepting input on the machinery exclusion process and the 19 newly proposed exclusions on solar equipment. All comments are submitted through the USTR comment portal.
May 24, 2024
This announcement was focused on what’s happening with the current exclusions, originally set to expire at the end of May 2024. These exclusions, 429 in total, were part of a review that started in December 2023.
For now, the 352 exclusions from the original process and the 77 COVID-specific product exclusions still in place will remain so until June 14, 2024.
The two-week period is to allow for importers to prepare for a transition because not all previous exclusions are getting extended beyond that date.
The USTR notice released after this announcement states that only 164 exclusions will be extended until May 31, 2025.
The notice, under 89 FR 46948, has placed the continued exclusions and the ones being canceled in two separate lists.
This notice also makes it evident that the USTR is no longer holding COVID-19 related products to a separate review process.
In 2018, the Trump administration imposed a series of extra tariffs on Chinese-made goods. To mitigate potential damage from these added tariffs, the USTR, under the direction of the Trump administration, announced that product exclusions could be granted under varying circumstances.
Since then, the Biden administration has continued to monitor and review the trade relationship between the U.S. and China, including the granting of tariff exclusion extensions.
Related: A Guide to China’s Section 301 Tariffs
To be granted a tariff exclusion or an extension to it, the applicant has to prove certain points that would convince the USTR that keeping a tariff on a product would cause more harm than good. Since requests were reviewed and granted on a case by case basis, it’s difficult to pinpoint any single determining factor.
In general, the products that were granted exclusions (about 13% of those requested) were able to prove one or more of the following points:
Using these as the basic standard for granting exclusions, just over 2,100 products were able to qualify. Once an exclusion is granted, importers other than the one filing the initial request can also benefit.
Each exclusion has its corresponding Harmonized Tariff Schedule of the U.S. (HTSUS or HTS) code. The exclusions are spread throughout the four different lists maintained by the USTR.
Most of the exclusions that were initially granted expired between 2019 and 2020, depending on when they were filed. Initial tariff exclusions stayed in effect for 12 months after approval.
In 2019, the USTR began the policy of accepting public opinion on whether extensions to any of the granted exclusions should be granted. The process was laid out in two Federal Register notices.
After final review, certain products from each of the USTR’s four tariff lists were granted extensions.
In total, 549 extensions were granted and set to expire between 2020 and 2021.
However, the identification of COVID-19 and the ensuing global pandemic that followed led the USTR to conduct more reviews. Only exclusions that were previously reviewed and granted could qualify.
The next extension review came in 2021 and covered the 549 HTSUS product descriptions that had previously been extended. Of these, only 352 were granted extensions in 2022.
Each of these 352 exclusions were extended multiple times.
The third extension mentioned included both the original 352 exclusions and 77 COVID-19 related exclusions. From that point forward, the two lists were reviewed together.
Initially, exclusions related to products that were considered essential in the ongoing fight against COVID-19 were handled separately. I’ll go into more detail on that in the next section.
After going through a similar process of accepting public comments, the USTR granted tariff exclusions to 99 healthcare and COVID-19 response related products on December 29, 2020.
Unlike previous extensions, these did not have to be on the list of previously granted exclusions. Like the others, however, there were also multiple reviews of the granted exclusions over the next few years.
Between 2021 and 2022, the USTR approved four extensions of the original 99. Then in May 2023, they cut back and only renewed the exclusions of 77 items.
You can find the exact list of 77 product descriptions listed on 88 FR 31580.
Those same 77 exclusions were extended once more in January 2024 along with the other 352 exclusions, but the most recent extension announced on May 24, 2024 canceled several.
With the most critical years of the pandemic now in the global rearview mirror, business continues as usual. The USTR’s decision to cut back further on tariff exclusions for such products reflects that attitude.
Speaking from my own experience, navigating the USTR’s reinstatement announcements and searching through the corresponding HTS codes can be difficult to do on your own. Hiring a customs broker to do this for you is a much better option.
If you import a product that falls under one of the excluded product description lists, you aren’t being charged an additional tariff beyond the Normal Trade Relation (NTR) rate.
It’s important not to confuse a tariff exclusion with a duty-free import. Under the current Section 301 tariffs applied to products from China, the extra duty is in addition to existing rates.
If, for some reason, you were charged the additional tariff, there is a refund process you can benefit from. This can happen in the following cases:
In any case, the presence of the exclusion is a huge financial break for many businesses that have no choice but to obtain their products from China.
After all, that is the main reason why the exclusions remain in place for certain products.
Related: Section 301 Tariff Refund: Eligibility and How to Apply
Worried about the Strict Regulations? Ask Our Experts.
Our 1-on-1 Consultation with Licensed Brokers Can Personally Guide You.
Customs brokers are specialists who are constantly involved with the importing process. Besides taking care of the overall import process, there are other ways that having a customs broker in your corner helps with 301 tariff exclusions.
In cases where you’re filing for a refund, customs brokers can conduct their own investigation into your request. By doing so, they will be able to provide all relevant information that CBP requires to approve the return of funds.
Section 301 tariff exclusions and their extensions can be complicated and hard to understand. With rules and regulations constantly changing, it’s important to have a strategic partner on your side.
At USA Customs Clearance, we can help you confirm your HTS product codes and its tariff status. Benefit from:
Call us today at (855) 912-0406 to speak with a representative or get a more direct response through our online contact form.
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