A toolset that is classifiable under a subheading not covered by the Section 301 tariffs is still subject to those tariffs because one of the components is subject to the tariffs, CBP said in a Sept. 6 ruling, HQ H299857. CBP's ruling followed a request for reconsideration of a ruling on the toolset at issue. Marilyn-Joy Cerny of Sandler Travis filed the reconsideration request and argued that the initial ruling "improperly extended the Section 301 measures to sets classified in subheading 8206.00.00," CBP said.
Section 301 (too broad)
International Trade Today is providing readers with some of the top stories for Oct. 1-5 in case they were missed.
The U.S. Hide, Skin and Leather Association and the American Apparel and Footwear Association are preparing an opinion piece to "address the benefits associated with updating the 9802 program," the USHSLA said in an email. Heading 9802 allows for "companies to deduct any U.S. components from their imported merchandise before assessing duty," the group said. The USHSLA didn't give any more specifics on the piece, which will run in The Hill. The Office of the U.S. Trade Representative recently ended the special tariff provisions in Chapter 98 for U.S. goods returned after assembly, repair, alterations and processing that are subject to Section 301 tariffs (see 1808160049).
Finished motors assembled in Mexico from three components from China are classifiable in subheading 8501.10.4060 and subject to the 25 percent tariffs under Section 301, CBP said in a Sept. 13 ruling modification. CBP reached the same conclusion as in the ruling being modified, NY N299096, but said that ruling was "incorrect as to the application of the NAFTA Marking Rules and the country of origin of the product." The original ruling request came from Johnson Electric in July, CBP said.
Master Electronics will absorb costs of Section 301 tariffs on Chinese imports that took effect over the summer by establishing itself as a “tariff free zone,” the electronics components distributor said in a news release. It’s vowing no tariff-related price increases or surcharges “for the foreseeable future.” The first two rounds of 25 percent tariffs took effect July 6 and Aug. 23. The third round took effect Sept. 24 at 10 percent, but is scheduled to rise to 25 percent after Jan. 1. “Our prices do change regularly based on supplier prices and market elements,” the company’s website says. “There will be no price change, surcharges, or fees due to tariff policy.”
Costco sees “many moving parts” in an “extremely fluid” environment now that Section 301 tariffs are in effect on $250 billion worth of Chinese imports, Chief Financial Officer Richard Galanti said on an Oct. 4 earnings call. Working with suppliers “to see what can be done to reduce and/or absorb some of the costs” is one of the strategies Costco is “exploring,” Galanti said. “Reducing our commitments on certain impacted items” is another possible remedy, he said. There’s “limited ability” to find “alternative country sourcing,” even where that’s “possible and feasible,” and that “takes time,” he said. “We’ll have to see how customers and competitors react to tariffs, and what impacts it will have.” It’s in Costco’s “DNA” to be the last to raise prices on consumers, and “we want to work with any supplier to figure out how to not do that,” Galanti said. That Costco owns more than $138 billion of purchasing power “affords us, I think, some opportunities that perhaps make it a little easier for us,” he said. People “smarter than me” don’t like tariffs, he said. “Whatever negative” they bring, “we can weather it better than others,” he said. Costco, through membership in the Retail Industry Leaders Association representing big-box retailers, lobbied unsuccessfully against the three rounds of tariffs.
The Commercial Customs Operations Advisory Committee (COAC) approved a broad set of recommendations for updating the foreign-trade zone regulations in 19 CFR 146 during its Oct. 3 meeting. The recommendations, which came through the Trade Modernization Subcommittee, are meant to address several issues, including confusion over the application of trade remedies to goods in FTZs and Section 321 entries for small value items. "Updating our FTZ practices and regulations is overdue," said Treasury Department Deputy Assistant Secretary Timothy Skud.
Witnesses from the United States Council for International Business, the Aluminum Association and the International Intellectual Property Alliance say that China is not living up to its World Trade Organization commitments on many fronts, even as there are some signs of movement away from practices that damage foreign competitors.
Reclassifying Chinese imports into Harmonized Tariff Schedule codes for goods not exposed to Section 301 tariffs is perhaps the least understood, most underused strategy that companies can try for minimizing the duties’ impact, a UPS executive said during an Oct. 3 webinar on high-tech supply chains. “If you’re not participating in what that classification process looks like, you’re taking a risk, I would say, at a minimum,” said Ron Shepherd, vice president at UPS Trade Management Services.
Alcatel-Lucent Enterprise (ALE) through year-end will “absorb” the “significant” cost increases of the 10 percent Section 301 tariffs on Chinese imports of networking equipment and components that took effect Sept. 24, it said in a Oct. 3 news release. The Trump administration removed imports of Bluetooth headphones, smartwatches and fitness trackers under the 8517.62.00 line item from the final tariffs list, but let 10 percent duties stand on networking equipment imported under the same classification. The tariffs are scheduled to rise to 25 percent after Jan. 1. “Many vendors have chosen to pass the cost through to channel partners and customers by immediately increasing prices,” but ALE “will absorb the current 10 percent increase and give partners the opportunity to place orders before a potential need to adjust pricing in the new year,” it said. Most U.S. customers “locked in 2018 budgets long ago and are already in planning cycles for next year,” ALE said. “We recognize an unexpected price increase could aggravate a budgeting process that is often already complex for business leaders.” It vowed to give three months’ notice of any 2019 price increases.