Bipartisan Bill Introduced in House, Senate to Force List 3 Tariff Exclusions

“I support President Trump’s goal of stopping China’s unfair trade practices, but we need to do so in a way that does not harm American farmers, manufacturers, and workers,” said Walorski, R-Ind. “A fair and transparent exclusion process for the latest round of China tariffs is long overdue, but it is clear USTR does not intend to meet the deadline imposed by Congress to establish one (see 1902270017). As a result, this bipartisan bill is necessary to provide much-needed relief to the American businesses and consumers paying the cost of these import taxes. I am hopeful the ongoing trade talks with China will lead to long-term benefits for our economy, but the administration must do more to create certainty for businesses and farmers.” Kind, D-Wis., said: "American companies deserve a process to petition our government to prove how and why these tariffs are hurting their bottom line, their workers, and their consumers. The administration’s unwillingness to create this exemption process has forced Congress to reassert its constitutionally granted powers."

The bill's language says that Section 301 tariffs cannot be collected on List 3 until the exclusion process is established. Exclusions would be retroactive, as they are for products on earlier lists. The USTR's media office did not respond to a request for comment.

The bill would also take away USTR's discretion to grant exclusions by requiring that they be offered for those items that are not produced outside of China "at a cost-competitive price at commercial scale," items for which the tariff would increase the cost of living for low- and middle-income families in the U.S., and items that do not directly benefit from China’s non-market-based policies. They still would have to be administrable by the CBP.

The bill's language says the cost to low- and middle-income families would be determined by either the CPI for all urban consumers or if the items listed in the appendix on CPI rise in price. Some of the items tracked by the government to determine inflation include furniture, apparel, bicycles, computers, household appliances and cameras.

It was less clear how the benefit would be measured, with the text simply saying exclusions are warranted for goods that have "not been found by a Federal agency to have directly benefited from the non-market-based policies of the People’s Republic of China, including elements of the Made in China 2025 policy."

A spokesman for Walorski said, "The criteria outlined in the bill are essentially a starting point for what we expect will be a bipartisan discussion in Congress about how these exclusion requests should be evaluated."

The third tranche of Section 301 tariffs, which covers about 5,700 8-digit tariff lines, went into effect Sept. 24, 2018. The Congress members cited the Congressional Research Service in saying that U.S. importers have paid more than $12.2 billion in tariffs for all three Section 301 lists through Feb. 21.

Americans for Free Trade lauded the bill's introduction, saying: "We applaud Senators Lankford and Coons and Reps. Kind and Walorski for stepping up to defend hardworking Americans who are paying these tariffs without any recourse. While our coalition’s primary objective is the elimination of these tariffs entirely, delivering relief for American businesses that can’t adjust their supply chains or are being faced with the need to increase prices on everyday products is a welcome step forward."

The National Retail Federation urged members to vote for the bill. “Establishing a timely and efficient tariff exclusion process is the least Washington can do for American businesses that have no alternative supplier and for working families that rely on everyday products," said David French, NRF's vice president-government relations.