Update 5/31/2019
UPDATE: USTR extends entry deadline for 10% tariffs on List 3 to June 15
USTR is extending the amount of time for importers to enter certain goods exported from China before the goods will be subject to an additional tariff increase from 10% to 25%.
Covered products that were exported from China to the United States prior to May 10, 2019 will remain subject to an additional 10% tariff if they enter for consumption into the U.S. before June 15, 2019.
Originally, the deadline to enter the U.S. before the goods would be subject to an additional 25 percent tariff was June 1, 2019. This limited extension will further account for customs enforcement factors and the transit time between China and the United States by sea, the USTR said.
In a CSMS notice, CBP offered guidance for importers: Importers entering subject goods on or after June 1, 2019 which were exported before May 10, 2019, and would be affected by this change, should consider waiting to file the entry summary pursuant to the ten day entry summary filing period. This will allow importers to file the appropriate duty rate with the entry summary when CBP updates ACE.
Importers who file entry summaries, and retroactively become subject to a lower duty rate, may refile the entry summary (if the entry summary is still in trade control) or file a Post Summary Correction with the appropriate duty rate (if the entry summary is in CBP control).
UWL will be working to refile any entries previously submitted that are now eligible for the lower duty rate.
If you have any questions, please contact your local UWL representative.
View USTR deadline extension notice >>
View CBP CSMS 19-000274 update guidance >>
View the official Federal Register Notice of the extension >>
Good news for importers with freight on the water from China that is on List 3: USTR took the export date into account when implementing the new tariff increase.
USTR officially confirmed that Section 301 Tariffs on List 3 will rise to 25%, effective with respect to goods that are:
- Entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EST on May 10, 2019 , AND;
- Exported to the United States on or after May 10, 2019.
Chinese goods that are covered by the September 2018 action and that were exported to the United States prior
to May 10, 2019, are not subject to the additional duty of 25 percent, as long as these products are entered into the
United States prior to June 15, 2019.
USTR will also establish an exclusion process for the tranche 3 products, including procedures for submitting the requests.
The list of products affected by the tariff increase can be found in Annex A of the USTR’s September 21, 2018 Notice.
We will add the official updates to the resource links below when they are available.
Resources:
- View the initial unpublished USTR tariff increase announcement here >>
- View the official Federal Register (84 FR 20459) announcement here >>
- View the U.S. CBP (CSMS # 19-000238) update & guidance here >>
- View the USTR’s September 21, 2018 Notice (83 FR 49153), including Annex A list of products here >>
Section 301 (Tranche 3) Duties as of May 10, 2019 - Guidance from U.S. CBP
CSMS Update (# 19-000238) Guidance
The increase in additional import duties for Chinese goods covered by the September 21, 2018 Federal Register notice, as amended, is now effective on May 10, 2019.
Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on May 10, 2019, and exported to the United States on or after May 10, 2019, the rate of additional duties on imported articles classified in a subheading covered by the September 21, 2018 Federal Register notice, as amended, will be 25 percent ad valorem.
For subject goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on May 10, 2019, and exported to the United States on or after May 10, 2019, report the following HTS numbers and duty rates:- HTS: 9903.88.03 and 9903.88.04
- Duty Rate: 25 percent
- HTS: 9903.88.09
- Duty Rate: 10 percent
The subject imports of China that are entered into the United States on or after June 1, 2019 are subject to the 25 percent rate of additional duty under HTS 9903.88.03 and 9903.88.04.
The Section 301 duties only apply to products of China, and are based on the country of origin, not country of export.
- View the complete U.S. CBP CSMS # 19-000238 update & guidance here >>
Trump: Third tranche of Section 301 Tariffs will increase to 25% on Friday due to "slow progress" of trade talks
On Sunday May 5, U.S. President Donald Trump changed his tone towards China, announcing in a series of tweets that a once-delayed increase to the third tranche of Section 301 tariffs on $200 billion worth of Chinese goods, currently at 10%, will increase to 25% on Friday, May 10.
Trump also threatened to impose 25% tariffs on an additional $325 billion of currently untaxed Chinese goods "shortly", in an effort to force more Chinese concessions in trade discussions, which the president claimed are continuing "too slowly" due to Chinese attempts to renegotiate parts of the deal.
Importers should quickly evaluate their potential exposure because if these tariff increase threats do become White House policy, they could impact import freight that is already en route to the United States. UWL President Duncan Wright weighs in on how this announcement could impact importers.
Trump tweets on tariff increases stun supply chains
As high-level Chinese officials head to Washington this week for what was supposed to be the final round of U.S.-China trade negotiations, President Trump turned up the pressure by threatening to increase existing tariffs and potentially adding an additional tranche of products for new 25% tariffs if no breakthrough is made by the end of the week.
....of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
— Donald J. Trump (@realDonaldTrump) May 5, 2019
The announcement roiled the stock markets on Monday, reflecting uncertainty over the potential for a trade deal between the U.S. and China.
UWL President Duncan Wright weighs in
"Once again, we have chaos from a tweet advising us that U.S. Importers will be hit with additional duties on their imports out of China to go live Friday with List 3 tariffs increasing to 25%," said UWL President Duncan Wright weighing in on the recent announcement.
"For our importers, this short lead time is highly problematic, as freight on the water will be impacted and they have no control and will have to pay this. They have no opportunity to plan or adjust their sales price to their customers, not to mention look for alternative sourcing of their goods," Wright explained.
"It has been announced that an exclusion process will happen for this tranche, and this may be this best scenario for companies that don’t have a sourcing alternative outside of China," said Wright.
Indeed, U.S. Trade Representative Robert Lighthizer told the U.S. House Ways and Means Committee that "USTR would initiate an appropriate exclusion process for List 3 if the duty rate on those tariffs were raised to 25 percent. Members of Congress believe that we should have an exclusion process for List 3. For this reason, we have begun preparations to launch a process by the end of the month."
For import freight currently on the water, rework will be necessary if the tariff increase threats come to fruition, but it may take time for the adjustments to occur.
"As customs brokers at UWL, we have already submitted a lot of these entries to customs which is work we will have to re-do, but before that happens, we (and U.S. Customs) need software providers to update the code before we can even adjust to this higher tariff," Wright said.
The threatened tariff increase and potential new fourth tranche of products won't become real policy until an official communication is released by the White House, which has yet to occur.
So what is an importer to do?
Before these potential tariff changes go into effect, we suggest that importers quickly assess their possible exposure and look for ways to mitigate the impact of both:
- If the List 3 tariff rate increases from 10% to 25% on Friday, May 10, and;
- Whether they are or will be importing any currently untaxed Chinese goods, like footwear or apparel, that could be subject to new 25% tariffs (List 4 goods).
Despite Trump's tariff threats, the Chinese delegation will still be arriving in Washington D.C. this week to continue the trade discussion, albeit with a "smaller delegation than the 100-person group originally planned."
We'll keep an eye on how the trade talks progress, so be sure to 
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