USTR Retroactively Reinstates 352 Section 301 Exclusions

In an awaited decision, the Office of the U.S. Trade Representative has issued Notice of its determination regarding the reinstatement of a range of Section 301 tariff exclusions. In total, 352 exclusions that had previously expired have been reinstated from October 12, 2021 through December 31, 2022.

?The decision follows from a request originally issued by USTR through which 549 previously granted and extended exclusions were presented for potential reinstatement. In arriving at its decision, USTR considered a range of factors including: (1) Whether the same and/or a comparable product was available either in the U.S. or a third country; (2) Whether any changes had occurred in the global supply chain that would warrant a different determination; (3) Whether importers/purchasers had made any efforts to resource from the U.S. or elsewhere; and (4) Whether there was domestic capacity to address industry needs. In addition, USTR also considered the impact exclusion reinstatement would have on domestic interests as well as the overall objective of eliminating China’s acts, policies and practices the focus of the Section 301 investigation itself.

?Further instructions on duty recovery for past entries will be forthcoming from U.S. Customs & Border Protection shortly. Per USTR's Notice, on-going entries of all products within scope should use HTSUS Tariff Item 9903.88.67 in order to realize the benefit from these reinstated exclusions.

?Where Does Section 301 Go From Here?

?While this addresses those pending exclusion reinstatements, the larger issue that looms over the horizon is what USTR will do to address Section 301's four-year sunset provision. Congress specifically provided under the Statute (actually Section 307 or 19 U.S.C. 2417) that tariffs imposed under Section 301 expire unless within 60 days of the four-year anniversary date either the "petitioner" or a "representative of the domestic industry" submits a written request to continue the action. Here, four potential sunset dates await, coincident with implementation of the tariffs under Lists 1 through 4A, respectively.

Who within the "domestic industry" might issue such a request is uncertain at this moment as most industries find themselves on both sides of the Section 301 issue. Moreover, even if a request is filed, the Statute requires USTR to then undertake a review to determine how effective the tariffs have been at effecting the desired change, whether other actions should be considered instead and – perhaps most importantly here – the overall effects of the actions taken on the U.S. economy including the consumer.

?Although there may be some room to argue, if USTR sticks to those criteria, it is difficult to see how they could conclude that the tariffs have resulted in any measurable change in China's offending practices as well as ignore the toll the tariffs have taken on both the U.S. economy and the consumer at large. That is even more so the case today given the high inflation that permeates. Having said that, given USTR's reinstatement of the 352 exclusions through December 31st, it seems likely that they intend to seek renewal of the tariff at some point before the four-year anniversary date.

?Please let us know if you have any questions regarding these reinstatements, as well as potential action USTR might take in light of the impending sunset provision.