trade war between China and the United States

In the recently passed appropriations legislation, Congress ordered the United States Trade Representative (USTR) office to create a process for requesting product-specific exclusions from the Section 307 retaliatory tariffs on $200 billion worth of imported goods from China. These tariffs are currently 10 percent but are scheduled to be increased to 25 percent as of March 2.

A discussion of this change was also included in House Appropriations Chairwoman Nita Lowey’s explanatory statement released alongside the bill. She also writes that additional funds provided this year to Commerce’s Bureau of Industry and Security will be “devoted to an effective Section 232 exclusion process.”

Specifically, Congress directed an exclusion process for the List 3 goods in the same procedure as in Lists 1 and 2. USTR must report to Congress on the nature and timing of this process no later than March 17. The opportunity exists now to push for the inclusion of a process for appealing exclusion denials. There is currently no such process for List 1 and List 2 goods, but USTR must consult with Congress in developing the List 3 exclusion process. Michael Best Strategies has already been raising this idea with members of Congress.

In addition, companies with List 3 goods should prepare to submit petitions seeking an exclusion. It is anticipated that USTR will require the submission of a form on which importers will need to demonstrate that there is no production of the product in the U.S., there is no alternative producer outside of China, it is not subsidized and does not further the China 2025 plan and/or the product is important to national security.

The Michael Best Strategies Trade team stands ready to assist in this process. Please contact us as soon as possible.

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