USTR extends certain China section 301 tariff exclusions

On May 30th, 2024, the U.S. Trade Representative has published a Federal Register Notice (FRN) announcing the extension of certain Section 301 tariff exclusions concerning China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.

The current 429 product exclusions (352 previously reinstated and 77 COVID-related) were set to expire on May 31st, 2024. The U.S. Trade Representative determined to provide a 14-day transition period for all current exclusions, extending them through June 14, 2024, and to extend certain exclusions through May 31, 2025.

This announcement follows the notice (88 FR 90225) provided by the USTR on December 29th, 2023, inviting the public to comment on whether to further extend any of the current exclusions and announcing an interim extension of the exclusions through May 31st, 2024. The notice provided that, in considering possible extensions, USTR would evaluate each exclusion on a case-by-case basis, with the focus of the evaluation on the availability of products covered by the exclusion from sources outside of China, efforts undertaken to source products covered by the exclusion from the United States or third countries, and whether further extension of a particular exclusion would aid in shifting sourcing outside of China. The notice also provided that USTR would consider the impact on U.S. interests of extending or not extending an exclusion and the goal of obtaining the elimination of China’s acts, policies, and practices covered in the investigation.

Based on evaluation, the U.S. Trade Representative has decided to extend certain trade exclusions, originally set to expire, until May 31st, 2025. This decision aims to support efforts to shift product sourcing away from China or where despite efforts to source products from alternative sources, availability of the product outside of China remains limited and additional time will be needed to put alternatives in place. However, exclusions not supported by public comments or deemed unnecessary for sourcing shifts will only be extended for a 14-day transition period.

The actions announced in FRN 89 FRN 46948 are as follow:

Extend all current exclusions through June 14th, 2024 to allow for transition. This includes all products of Annex A and Annex B.
Extend exclusions for products listed in Annex C through May 31st, 2025.
Those exclusions that will expire after the 14 day transition period (102 products) are listed in Annex D.

The extensions announced in the notice are available for any product that meets the description in the product exclusion. The scope of each exclusion and modification is governed by the scope of the ten-digit Harmonized Tariff Schedule of the United States (HTSUS) subheadings and product descriptions in the Annexes of this notice. U.S. Customs and Border Protection will provide additional guidance on the implementation of these exclusions.

Companies should conduct a thorough review of the FRN and pay particular attention to the Annexes which provide a list of the impacted products by Harmonized Tariff Schedule number. Identify any products in your product database that are within the scope of the FRN, along with the potential duty increase, and timing of the increase. A comprehensive assessment of cost impact should be completed, as well as an analysis of alternate sourcing options should it be determined that the duty increase is not acceptable. Attention should also be given to any products that may be eligible for exclusion through May 31st, 2025.

For more information on how ONESOURCE Global Trade solutions can assist you in managing Sectio 301 duties, including conducting trade lane analysis, please contact your Account Manager or Client Services Manager.