US Tariff Exclusion for Chinese Imports: FAQs
While the US has imposed additional tariffs on Chinese imports in the course of the US-China trade war, the Office of the US Trade Representative (USTR) has put in place a tariff exclusion process to exempt certain Chinese imports from additional tariffs.
Chinese goods in either one of the following four Section 301 lists are allowed to apply for tariff exemption through the USTR.
- List 1 – US$34 billion worth of Chinese products, effective from July 6, 2018
- List 2 – US$16 billion worth of Chinese products, effective from August 23, 2018
- List 3 – US$200 billion worth of Chinese products, effective from September 24, 2018
- List 4 – US$300 billion worth of Chinese products, effective from September 1, 2019 and December 15, 2019
So far, the exclusion processes for products in List 1 and 2 have been closed, the process for List 3 will soon end on September 30, 2019, and the process for List 4 is waiting to be announced.
The release of three new lists (containing 437 product exemptions) by USTR on September 20 means that a total of 11 lists of exemptions have been granted so far.
This article provides the most updated US tariff exclusion status and a guide to apply for US tariff exclusion.
Eleven rounds of product exclusion granted
So far, in total, 11 exclusion lists have been released on the USTR website.
For List 1 (US$34 billion trade action) – seven batches of exclusions have been granted:
- Exclusions Granted December 21, 2018 (Federal Register: 83 FR 67463);
- Exclusions Granted March 25, 2019 (Federal Register: 84 FR 11152);
- Exclusions Granted April 18, 2019 (Federal Register: 84 FR 16310);
- Exclusions Granted May 14, 2019 ( Federal Register: 84 FR 21389);
- Exclusions Granted June 4, 2019 (Federal Register: 84 FR 25895);
- Exclusions Granted July 9, 2019 (Federal Register: 84 FR 32821); and
- Exclusions Granted September 20, 2019 (Federal Register: 84 FR 49564).
For List 2 (US$16 billion trade action) – two batches of exclusions have been granted:
- Exclusions Granted July 31, 2019 (Federal Register: 84 FR 37381); and
- Exclusions Granted September 20, 2019 (Federal Register: 84 FR 49600).
For List 3 (US$200 billion trade action) – two batches of exclusions have been granted:
- Exclusions Granted August 7, 2019 (Federal Register: 84 FR 38717); and
- Exclusions Granted September 20, 2019 (Federal Register: 84 FR 49591).
Application process for tariffs covering US$200 billion of Chinese imports
The application for products in List 3 started from June 30, 2019 and will end on September 30, 2019. Interested parties in the US can request the exemption at the website: https://exclusions.ustr.gov.
Businesses can refer to the Federal Register (84 FR 29576) published by the USTR on June 24 to learn the procedures to request the exclusion of products and download the exclusion request form.
Those seeking to exclude two or more products must submit a separate request for each product, that is one product per request.
Who can apply for tariff exemption in the US?
Interested persons in the US, including third parties (such as law firms, trade associations, and customs brokers) can submit requests for exemption from additional duties.
Which US imports are eligible for tariff exemption?
The products eligible for tariff exemption requests are classified within the Harmonized Tariff Schedule of the United States (HTSUS) subheadings in Annex A of the notice published at 83 FR 47974 (the Federal Register published on September 21, 2018), as amended and modified by 83 FR 49153 (the Federal Register published on September 28, 2018).
How does the US government decide if a product is worthy of tariff exemption?
The US government will consider the following when processing tariff exemption requests:
- Whether the particular product is available only from China, and whether the company made any efforts to source the product from non-Chinese suppliers.
- Whether the imposition of additional duties (since September 2018) on the particular product has or will cause severe economic harm to the requester or other US interests.
- Whether the particular product is strategically important or related to ‘‘Made in China 2025’’ or other Chinese industrial programs.
In addressing each factor, the requester should provide support for their assertions.
What are the documents required to apply for the tariff exemption?
To submit an exemption request, applicants must first register on the USTR portal at http://exclusions.USTR.gov.
After registration, the applicant can fill out and submit one or more exclusion request forms.
The three major steps during the process include:
- The applicant fills out the Exclusion Request Form and submits requests in the period between the opening of the portal on June 30, 2019 and the September 30 deadline;
- Other interested parties fill out the Exclusion Response Form to respond to those requests indicating their support or opposition and providing reasons for their respective views – within 14 days after the requests are posted online; and
- The applicant fills out the Exclusion Reply Form to reply to a response within seven days after the close of the 14-day response period, or seven days after the posting of a response.
Information and documents that will need to be prepared include:
- Requester information;
- 10-digit HTSUS item number of the product of concern;
- A complete and detailed description of the particular product;
- Requestor’s relationship to the product;
- Product substitutability in the US;
- Product substitutability in the third country;
- Requester’s attempts to source this product from the US or other third countries;
- The value in US dollars and quantity (with units) of the Chinese-origin product of concern that was purchased in 2017, 2018, and the first quarter of 2019;
- The value in US dollars and quantity (with units) of the product of concern that was purchased from any third-country source in 2017, 2018, and the first quarter of 2019;
- The value in US dollars and quantity (with units) of the product of concern that was purchased from US sources in 2017, 2018, and the first quarter of 2019;
- Information regarding the company’s gross revenue in US dollars for 2018, the first quarter of 2018, and the first quarter of 2019;
- If the Chinese-origin product of concern is sold as a final product or as an input used in the production of a final product;
- Whether the imposition of additional duties (since September 2018) on the product has resulted in severe economic harm to the company or other US interests;
- Whether the requester has submitted exclusion requests for the Section 301 – US$34 billion and/or US$16 billion – tariff actions;
- Whether the particular product is strategically important or related to “Made in China 2025” or other Chinese industrial programs;
- Any additional supporting information; and
- Any additional supporting attachments.
What is the validity period of an approved exemption?
Any tariff exemption on the product(s), if granted, will be valid for one year after the notice of the exclusion is published in the Federal Register.
Compared with China’s own exemption procedures, the US tariff exclusion process additionally involves seeking opinions from other relevant interested parties.
The USTR also requires a more detailed description of the particular product, including its physical characteristics, function, application, principal use, and any other unique physical features that distinguish it from other products.
The USTR will evaluate each request on a “case-by-case basis,” taking into account whether the exclusion would undermine the objective of the Section 301 investigation, and whether the request defines the product with “sufficient precision.”
Editor’s Note: This article was originally published on July 2, 2019. The article has been updated on September 24, 2019 to include new developments. See here for our article explaining China’s tariff exclusion process.
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