International Trade Today is providing readers with some of the top stories for Aug. 20-24 in case they were missed.
Section 301 (too broad)
Marketers of low-end consumer electronics (CE) products will be especially vulnerable if the Trump administration imposes a third tranche of 25 percent Section 301 tariffs on Chinese imports, companies said in comments in docket USTR-2018-0026. Both said their businesses are too profit-poor to absorb higher customs duties, and they worry about the pass-along impact of higher pricing.
China began a World Trade Organization challenge of 25 percent Section 301 tariffs on a second group of $16 billion in Chinese goods that began Aug. 23, the WTO said in a news release. China requested consultations with the U.S. on Aug. 23, saying the measures violate WTO rules by imposing higher tariffs on China than on other countries, exceeding U.S.-agreed bound rates and retaliating against China without first filing a WTO dispute. Under WTO rules, China may request the formation of a panel to adjudicate the case if consultations don’t resolve the dispute after 60 days. China has already filed a challenge of the first group of $34 billion in goods subject to Section 301 tariffs since July 6 (see 1807060012), as well as proposed tariffs on a third group of $200 billion in Chinese goods (see 1807160046).
The House could pass the Miscellaneous Tariff Bill in the first week or so following a return from recess after Labor Day "if they think that they can get it passed and get it through the president to sign," said Jon Kent, a lobbyist for the National Customs Brokers & Forwarders Association of America with Kent & O'Connor. One potential issue could be inconsistency concerns within the administration over tariff cuts on many goods that come from China as other tariffs are being added under Section 301 and other trade remedies, Kent said.
The International Trade Commission recently issued Revision 10 to the Harmonized Tariff Schedule, implementing Section 301 tariffs on a second set of goods from China effective Aug. 23, and making related changes that also affect the first tranche. New subheading 9903.88.02 is created for the new set of goods, with goods in the first tariff list that took effect July 6 still classifiable in subheading 9903.88.01 (see 1808210031). A list of goods subject to the new tariffs is added in U.S. Note 20(d) to Subchapter II of Chapter 99, while provisions on how the tariffs are to be applied are added at U.S. Note 20(c). The list of goods subject to the first round of tariffs at U.S. Note 20(b) is modified to correct a technical error. Provisions at U.S. Note 20(a) on how those tariffs are to be applied are modified to reflect the end of a total exemption from the Section 301 tariffs on U.S. goods returned after repair or alteration, processing or assembly (see 1808160049). All changes included in Revision 10 take effect Aug. 23.
The National Association of Foreign-Trade Zones recently wrote to Foreign-Trade Zones Board Executive Secretary Andrew McGilvray as part of the group's effort to address the "unintended and injurious impact" of section 201 and 301 tariffs on manufacturers in U.S. FTZs. NAFTZ is trying to get the Office of the U.S. Trade Representative to resolve issues involving the USTR's trade remedy language that results in unfair treatment of goods manufactured within FTZs (see 1808220034). "We respectfully request that the Foreign-Trade Zones Board communicate immediately with USTR to help resolve this increasingly-damaging situation for American FTZ manufacturers," he said.
CBP issued the following releases on commercial trade and related matters:
National Association of Foreign-Trade Zones President Erik Autor is set to meet with officials at the Office of the U.S. Trade Representative in the coming weeks to discuss a quirk in foreign-trade zone filing requirements that’s resulting in the unfair application of Section 301 duties, he said in an Aug. 21 interview. Autor seeks to educate USTR on how tariffs apply to FTZ goods, in the hopes that the agency will amend Section 301 implementation language related to zones that CBP says leaves it with no choice but to sometimes collect the tariffs on inputs that sometimes aren’t even Chinese.
CBP is seeing an increase in bond insufficiency related to new sections 301 and 232 tariffs and expects that trend to continue, the agency told Colleen Clarke, vice president-business development at Roanoke Insurance Group. The National Customs Brokers & Forwarders Association of American said in an Aug. 20 email to members that CBP told Clarke that the agency "is urging brokers and sureties to be proactive in determining bond sufficiency." Roanoke Trade mentioned the issue during a webinar last month (see 1807260011).
While most of the witnesses on the first day of Section 301 tariffs hearings on Aug. 20 asked that items be taken off the tariff list, several companies and a trade group asked that more products be taxed. Mike Branson, executive vice president of Rheem Manufacturing's air conditioning division, said he was pleased that several subheadings in heading 8415 were on the latest list of targets. But he said 8415.94.40 and 8414.90.80 need to be added, "otherwise Chinese exporters of finished good air conditioners will be able to avoid the tariffs."