On December 31, 2020 most remaining Section 301 Exclusions are set to expire and importers who have been avoiding additional tariffs, some up to 25 percent, will be required to pay on products from China.
HOUSE ACTION
The National Retail Federation (NRF) provided a letter to legislators, now supported and signed by seventy-five members of the House, asking U.S. Trade Representative, Robert Lighthizer, to automatically extend all product exclusions, citing pandemic and market conditions:
“We write today to strongly urge you to extend all active exclusions from the Section 301 China tariffs, which are currently scheduled to expire on December 31, 2020, for an appropriate amount of time to provide economic stability as businesses grapple the unprecedent hardships caused by the COVID-19 pandemic.
This issue is of vital importance. Our economy remains in a fragile state due to the ongoing COVID-19 pandemic, and many of the expiring exclusions are critical to the pandemic response. They cover inputs for household and professional cleaning goods, as well as personal protective equipment (PPE) and other medical supplies for doctor’s offices and hospitals. This includes equipment for the administration of the vaccines that we all hope will defeat COVID-19. We should certainly examine our reliance on China for these articles and increase U.S. production, and we are actively engaged in crafting policies to do so. However, reducing tariffs is still necessary to maximize our supply of PPE and other supplies while companies build production capacity in the U.S. and re-shore supply chains…
We recognize that the exclusions were granted in part on the premise that businesses need adequate time to relocate their supply chains out of China. However, manufacturing has taken a severe hit this year, making it extremely difficult amid this crisis to identify potential suppliers in the United States or abroad. With global travel essentially shut down, it has been difficult, if not impossible, for company representatives to travel to and inspect potential new sites and to build relationships with new partners. Again, small businesses are disproportionately harmed.”
SENATE SUPPORT
Bipartisan support has also come from the Senate, urging the U.S. Trade Representative to extend expiring Section 301 exclusions all the way through December 31, 2021.
“While we continue to question the use of Section 301 of the Trade Act of 1974 as a blunt instrument to curb China’s unfair trade practices, we appreciate the administration’s willingness to help mitigate potential harm to U.S. firms by implementing a process through which they may request exclusions from tariffs for certain imported products.
Many of those exclusions, however, stand to expire at the end of this year, injecting risk and uncertainty into the U.S. economy at a time when we can least afford it. If these tariffs are allowed to snap back into place for products that were previously excluded, it would represent a precipitous and immediate increase in costs for firms that rely on these inputs to add value to products manufactured here at home.
In order to prevent this outcome, we respectfully ask that you extend through December 31, 2021, those exclusions from Section 301 tariffs that are set to expire December 31, 2020.”
Bipartisan Letter from Senate to U.S. Trade Representative Lighthizer
As the United States transitions administrations, is it not yet determined if action will be taken to secure an extension for Section 301 exclusions expiring on December 31, 2020.
BAD TIMING
The deadline comes at a crucial point for U.S. supply chains as severe port congestion, container equipment shortages, backlogs at major rail terminals and trucking capacity bottleneck product distribution coast-to-coast and globally. The push for remaining inventories to arrive and clear Customs within the exclusion timeframe has created extreme demand adding the stress of potential and uncontrollable costs for many shipments.
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