Ask An Attorney - Section 301 Exclusions
Section 301 Exclusions Extended - Beware of the Gap Period!
In late December, the USTR extended the remaining exclusions from the Sec. 301 tariffs from January 1, 2024 through May 31, 2024. Unfortunately, because the USTR waited until the last minute to issue the exclusions, U.S. Customs (CBP) did not have time over the holiday weekend to re-program the electronic entry system. That lead to this message from CBP (courtesy of AFT):
U.S. Customs and Border Protection issued a Cargo Systems Messaging Service notice regarding the extension of the Section 301 China Tariff Exclusions on December 29 -
CSMS # 58869963 - GUIDANCE: Extension of Section 301 China Product Exclusions. Even though USTR extended the exclusions for an additional five months, CBP has stated in the notice that, “Automated Commercial Environment (ACE) functionality for the acceptance of the extended product exclusions will be available on January 4, 2024, as of 7 am eastern standard time.” This means that the exclusions will actually expire for 3 days and companies will have to request a retroactive refund. The message further states, “Specifically, if importers enter Chinese goods during the gap period, January 1 through January 3, 2024, subject to the extended exclusions under HTSUS 9903.88.67 or HTSUS 9903.88.68, and pay Section 301 duties, importers should file a PSC on or after January 4, 2024 to obtain a refund of duties paid.”
For ease of reference, USTR is also posting a list of the exclusions on their website. Therefore, if you imported a shipment subject to the exclusions during this time period, the exclusion will not automatically apply and your broker will have to file a Post Summary Change (PSC) to obtain a refund of the ‘China tariff’. We recommend that you contact your broker as soon as possible to make sure they are aware of this message.
The USTR’s extension notice states that they will be accepting public comments on whether to extend these exclusions past May 31, 2024. The portal for
comments will open on January 22, 2024 and will close February 21, 2024 at 11:59 p.m. ET. The notice indicates that the USTR will require companies to comment on:
• Whether you support or oppose extending the exclusion beyond May 31, 2024.
• The availability of products covered by the exclusion from sources outside of China.
• Efforts undertaken to source the product from the United States or third countries.
• Why additional time is needed to shift sourcing out of China and on what timeline, if any, you expect sourcing to shift outside of China.
If your company is interested in commenting in order to extend the exclusions, we recommend including comments on all the costs of relocating sourcing outside of China.
Courtesy of Meeks, Sheppard, Leo & Pillsbury LLP