Reinstatement of U.S. tariff exclusions: Implications for the manufacturing industry
Background and timeline of Section 301 tariff exclusions
In 2018, the Trump administration imposed four rounds of Section 301 tariff actions against products imported from China with a value of $34 billion, $16 billion, $200 billion, and $300 billion respectively.
Shortly afterward, in order to relieve the impact of the tariffs on certain American businesses importing from China, the U.S. Trade Representative (USTR) established a process of tariff exclusion and approved more than 2,200 tariff-excluded items. Most of these exclusions expired in 2019, although 549 items were extended for one year and expired at the end of 2020.
In October 2021, USTR restarted the tariff exclusion process for the 549 products and accepted public comments.
On March 24, 2022, USTR announced the reinstatement of 352 exclusions from the Section 301 tariffs.
What items are on the list of 2022 reinstated tariff exclusions?
Most of the 352 items focus on industrial goods such as mechanical and electrical products, vehicle components, printed circuit boards, chemicals, medical equipment, as well as retail products, including electronics, bicycles, apparel and textile, furniture, etc. These products comprise much of the $370 billion in imports from China onto which the Trump administration imposed tariffs.
Among the reinstated tariff-excluded product categories, electrical and mechanical products accounted for a significant part of U.S. imports from China, with a total import value of $34.1 billion (electrical) and $23.9 billion (mechanical) respectively. The extended exclusions could benefit many U.S. manufacturers and retailers sourcing from China. You can find a full list of the reinstated exclusions at the USTR website.
Effective terms and conditions of the reinstated tariff exclusions
The reinstated exclusions are retroactive to Oct. 12, 2021, and will be in effect through the end of 2022. Products eligible for tariff exemption or tariff return must meet the following conditions:
- Goods must have entered the United States on or after 12:01 a.m. Eastern Daylight Time on Oct. 12, 2021.
- Eligible goods include those that aren’t liquidated or if entries are liquidated but within the period for protest described in Section 514 of the Tariff Act of 1930 (usually within 180 days after liquidation).
The reinstated exclusions are retroactive to Oct. 12, 2021, and will be in effect through the end of 2022.
What do reinstated tariff exclusions mean for U.S. importers?
While the USTR’s announcement is limited to 352 exclusions this time, the decision to reinstate them sent a positive signal that may help to lower the cost for U.S. importers, stabilize some of the commodity prices, and normalize the bilateral trade and supply chain between the United States and China, especially under the ongoing global economic and supply chain challenges.
We recommend companies importing these items from China carefully work through the application procedures, following U.S. Customs and Border Protection instructions.
If you have questions or need additional assistance, feel free to reach out to Alejandro Rodriguez.
* USTR website where a full list of the reinstated exclusions can be found: https://ustr.gov/sites/default/files/notices/FRN%20for%20Notice%20of%20Reinstatement.pdf