USTR reinstates additional duty exclusions on Chinese imports: PwC

In brief

Pursuant to a Federal Register Notice dated March 23, 2022, the Office of the United States Trade Representative (USTR) has reinstated 352 of the 549 previously extended exclusions from additional tariffs on goods imported from China, retroactive to October 12, 2021, through December 31, 2022.

The USTR previously had modified the action in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation by excluding certain products from additional duties. The USTR subsequently extended 549 of these exclusions. The USTR now has further extended certain of these exclusions.

Action item: The exclusions cover many categories of products, so businesses should review the complete list to see if they are affected.

In detail

In the course of the Section 301 investigation, the USTR imposed additional tariffs on products of China in four tranches. Each tranche is commonly known as a ‘List.’ The fourth tranche is contained in Lists 4A and 4B. No tariffs on List 4B currently are in effect.

For each tranche, the USTR established a process by which US stakeholders could request the exclusion of particular products subject to the action. The first tranche of exclusions expired in December 2019; the final tranche of exclusions expired in October 2020.

Starting in November 2019, the USTR established processes for submitting public comments on whether to extend particular exclusions. Pursuant to these processes, the USTR extended 137 exclusions covered under List 1, 59 exclusions on List 2, 266 exclusions on List 3, and 87 exclusions on List 4. With the exception of exclusions related to the COVID-19 pandemic, all of these 549 exclusions have expired. In particular, the exclusions for most of these products expired by December 31, 2020, and the remaining exclusions expired in 2021.

On October 8, 2021, the USTR invited the public to comment on whether to reinstate particular exclusions previously granted and extended under the four tranches. The USTR listed certain factors to be considered in decisions on possible reinstatement:

Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries
Any changes in the global supply chain since September 2018 with respect to the particular product or any other relevant industry developments
The efforts, if any, the importers or US purchasers have undertaken since September 2018 to source the product from the United States or third countries
Domestic capacity for producing the product in the United States.

The USTR also considered whether reinstating the exclusion would impact or result in severe economic harm to the commenter or other US interests, including the impact on small businesses, employment, manufacturing output, and critical supply chains in the United States, as well as the overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies, and practices covered in the Section 301 investigation.

Based on its evaluation of the factors listed above, the public comments received, and the advice of advisory committees, the USTR has determined to reinstate certain exclusions covering a wide range of products, including: