Importers May Pay Higher 25% Tariffs for List 3 Items When Imports are Eligible for 10% Rate

The USTR published today notice of its intent to raise List 3 Section 301 tariffs from 10% to 25%. A copy of the notice is available here.

The effective date of the tariff increase will occur with respect to goods (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019. Therefore, an entry of merchandise included on List 3 exported from China prior to May 10th would not be subject to the 25% duty rate even if it was entered after 12:01 am Friday. List 3 Items are subject to the additional 25% under HTS subheadings 9908.88.03 & 9908.88.04 respectively.

The export date requirement for the tariff increase is proving difficult for CBP to implement.

U.S. Customs and Border Protection (CBP) also issued today its notice to implement the tariff increase for entry filers. A copy is available here. While CBP intends to modify the tariff provisions for List 3 to reflect the 25% rate for shipments entered on or after May 10, CBP also indicates it must still work with the USTR to adjust entry filing requirements to account for the proper duty rate on transactions exported prior to May 10. CBP states for such items “importers can pay the 25 percent duty and file for a Post Summary Correction when filing instructions are available for the 10 percent duty.” This may effectively require all importers to pay the higher tariff even if the products are exported prior to May 10 until such time as CBP can update automated systems to post the correct duty rate based on the reported export date.

CBP indicated that importers can delay their entry summary filing within the 10-day filing period to wait for additional instructions. However, if this is not resolved within that window, importers will be required to advance duties and re-work entries to ensure they do not overpay CBP. It remains unclear how long it will take CBP to adjust the entry filing requirements for these imports.

The USTR notice also announces that a product exclusion process for articles on List 3 will be forthcoming with additional details under a separate Federal Register notice. The process will likely mirror the exclusion process implemented for Lists 1 & 2. If so, importers could potentially seek both retroactive relief on prior payments of the List 3 10% tariffs, and obtain relief going forward on the 25% tariffs provided the USTR does not modify its approach from Lists 1 & 2 which allow for retroactive relief to when the tariffs were originally enacted.

Should you have any questions concerning these developments, please contact one of the trade professionals listed here