Biden Administration Extends Expiring China Tariff Exclusions to May 31
In this video from The Franklin Partnership, contributing author Omar Nashashibi offers updates regarding tariffs with China.
Biden Administration Extends Expiring China Tariff Exclusions to May 31
On December 29, 2023, the Office of the U.S. Trade Representative (USTR) published in the Federal Register a notice extending 429 product exclusions through May 31, 2024, from being subject to Section 301 tariffs on imports from China. The USTR, however, did not release its long awaited four-year review of the tariff action that the law requires the Biden administration to conduct since imposition of the tariffs beginning in July 2018. Until the Biden administration officially releases its report and announces any changes in their policy, the 25 percent and 7.5 percent tariffs on more than 10,000 imports from China will remain in place.
Announced in May 2022, many in Washington, D.C. had expected the Biden administration to release the results of their four year review by the end of 2023 after repeated delays earlier in the year. The report had been expected to include not only a review of the impact of the Section 301 tariffs on the U.S., but also provide insights into next steps on whether USTR will restart the tariff exclusion process. In its notice, the USTR continues to tie the latest exclusion extension to the tariff review, further delaying decisions on the exclusions and tariff policy towards China.
Starting in 2018, the Trump administration began imposing tariffs of 25 percent on Lists 1, 2, and 3, totaling roughly 6,800 imports from China under Section 301 of U.S. trade law and 7.5 percent on List 4a, consisting of 3,200 goods. At the time, USTR established an exclusion process by which an importer could request the temporary suspension of the tariffs on that product. According to the Congressional Research Service, which operates solely at the direction of the U.S. Congress, through January 2020, USTR received nearly 53,000 new exclusion requests, granting only 13 percent.
Of the 6,804 exclusions granted, most exclusions lasted for twelve months, although USTR subsequently extended some beyond their initial expiration. The Biden administration has allowed all but 429 exclusions to expire, of those, 77 are COVID-specific exclusions, with many of the others covering a range products.
The exclusion lists extended in the December 29 notice, include Chinese imports such as transparent tape of plastic, dispensers of hand sanitizing solutions, chemical products under HTS chapter 38, woven fabric under Chapter 54, but also machinery equipment found under Chapter 84, and electric motors and other components from China.
These 429 are the only remaining exclusions. If you are importing products from China among those 429 still granted an exclusion, or you compete with that import, USTR is allowing a thirty-day comment period. From January 22, 2024 to February 21, 2024, USTR will accept public comments through an open docket on whether to extend yet again the exclusions beyond May 31, 2024. As they have in the past, USTR will consider a number of factors when deciding whether to grant an additional extension to the exclusion that would not subject the Chinese import to a 25 percent or 7.5 percent tariff.
According to the Federal Register notice, among the factors USTR will consider, and for exclusion requesters to address, are “the availability of products covered by the exclusion from sources outside of China, efforts undertaken to source products covered by the exclusion from the United States or third countries, why additional time is needed, and on what timeline, if any, the sourcing of products covered by exclusion is likely to shift outside of China. In addition, USTR will consider whether or not extending the exclusion will impact U.S. interests, including the overall impact of the exclusion on the goal of obtaining the elimination of China’s acts, policies and practices covered in the Section 301 investigation.”
If you are considering submitting a public comment in support or opposition to an exclusion request, note that the February 21, 2024 deadline is rapidly approaching.
Jennifer Clement is an executive sales and marketing leader specializing in value creation for the C-suite. In her current role at CLA, Jennifer collaborates on strategy with executives of global manufacturing and distribution companies to accelerate results. Previously Jennifer served as a Global Business Acceleration Leader for Complete Manufacturing and Distribution (CMD). During her time with CMD, Jennifer lived and worked in Asia from 2015-2019. Prior to CMD, she spent 10 years in senior care technology. Jennifer started her career at Johnson Controls (JCI) and spent nine years in leadership roles; followed by five years at Rockwell Automation (ROK) leading c-suite strategy and marketing operations.
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