Customs Fees to be Adjusted due to Inflation

Pursuant to the General Notice (83 FRN 37509) published August 1, 2018, various changes to user fees within the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 will take effect on October 1, 2018

The Merchandise Processing Fee (MPF) ad valorem rate of 0.3464%

The MPF minimum and maximum for formal entries (class code 499)

The minimum will change from $25.67 to $26.22 and the maximum will change from $497.99 to $508.70.

The Informal MPF (class code 311) will change to $2.10.

The dutiable mail fee (class code 496) will change to $5.77.

The surcharge for manual entry or release will change to $3.15.

Contact PROLOGIX today to learn more about all the other fee increases CBP is proposing to implement this October.

EU Imposes Steel Safeguards to Address Diversion Due to U.S. Tariffs

Effective July 19 the European Commission imposed provisional safeguard measures on imports of a number of steel products in an effort to prevent the diversion of steel from other countries to the EU market as a result of the U.S. Section 232 tariffs on steel. EU Trade Commissioner Cecilia Malmström said these measures “will maintain traditional trade flows” and should “strike the right balance between the interest of EU producers and users of steel, like the automotive industry and the construction sector, who rely on imports.”

(Click here for ST&R’s web page providing comprehensive information on all U.S. tariffs imposed under Section 301 and Section 232 as well as the retaliatory tariffs trading partners are levying on U.S. goods.)

According to an EC press release, for each of 23 categories of steel products tariffs of 25 percent will be imposed once imports exceed the average of imports over the last three years. The quota will be allocated on a first come, first served basis and will thus not be not allocated by individual exporting country at this time. These measures are being imposed against all countries except (a) some developing countries with limited exports to the EU and the European Economic Area countries (Norway, Iceland, and Liechtenstein).

The provisional measures can remain in place for a maximum of 200 days. All interested parties will now have the opportunity to comment and the Commission will take this input into consideration in reaching its final conclusion, which will come by early 2019 at the latest. If all conditions are met, definitive safeguard measures may be imposed as a result.

Japan, Russia, Turkey bring potential U.S. tariff retaliation to $3.5 billion

Japan, Russia and Turkey have warned the United States about potential retaliation for its tariffs on steel and aluminum, the World Trade Organization said on Tuesday, bringing the total U.S. tariff bill to around $3.5 billion annually.

The three countries detailed their compensation claims in notifications to the world trade body, following similar moves by the European Union, India and China. Each showed how much the disputed U.S. tariffs would add to the cost of steel and aluminum exports to the United States, based on 2017 trade.

Russia said the U.S. tariffs, which President Donald Trump imposed in March, would add duties of $538 million to its annual steel and aluminum exports. Japan put the sum at $440 million. Turkey added a further $267 million.

China, the 28-nation EU and India have put their claims at $612 million, $1.6 billion and $165 million respectively.

They all reject the U.S. view that the import tariffs -- 25 percent on steel and 10 percent on aluminum -- are justified by U.S. national security concerns and are therefore exempt from the WTO rules.

They say the U.S. tariffs have all the hallmarks of "safeguards", a trade restriction that can be legitimately used to protect a struggling industry from an unforeseen surge in imports.

A country using safeguards must compensate other WTO members who stand to lose out from the restriction on their trade, normally by rebalancing their trading relationship with a net increase in imports of other goods.

But the United States denies its tariffs are safeguards and has offered no compensation, prompting the retaliatory action.

The compensation would normally take years, but because the U.S. steel and aluminum sectors were not facing an absolute increase in imports, the WTO rules permitted retaliation in just 30 days' time, they said.

Japan said it was free to impose at least $264 million of its retaliation after 30 days, suggesting that the rest might be delayed, since some of the U.S. products covered by the tariffs were subject to an absolute increase in imports from Japan.

Neither Russia nor Japan specified how they might retaliate against U.S. exports, but Turkey listed 22 U.S. goods that it was planning to target, ranging from nuts, rice and tobacco to cars and steel products.

Import Alerts on Foods, Drugs, and Medical Devices That May be Detained

Food and Drug Administration import alerts on the following have been modified in the past week

- products from Japan due to radionuclide contamination

- medical instruments from Pakistan

- coconut

- imported food products that appear to be misbranded

- animal feeds other than pet treats

- active pharmaceutical ingredients that appear to be misbranded

- frozen and refrigerated guacamole and processed avocado products

- tamarind products from all shippers from all countries

Chinese-Origin Goods Imported into the United States Are Now in Effect

On July 6th (12:01 a.m.), the Section 301 tariffs on imports of certain Chinese goods into the United States officially went into effect. Goods classified in one of the covered subheadings that are products of China are now subject to a 25% ad valorem rate of duty in addition to the applicable general (Column 1) rates of duty and any antidumping or countervailing duties.  It should be noted that the Section 301 duties only apply to products of China (i.e., Chinese-origin goods)—non-Chinese origin goods that are exported from China are not subject to the tariffs. The increased tariffs are the result of an investigation by the U.S. Trade Representative (USTR) into China’s practice of requiring U.S. companies to transfer their intellectual property rights and technologies to Chinese companies in order to obtain business licenses and approval to invest in China. The USTR determined that these practices were unreasonable, discriminatory and restrict U.S. commerce.

The Section 301 tariffs impact over 800 Harmonized System classification subheadings and target strategically important products or that relate to Chinese industrial programs such as “Made in China 2025.”  The USTR is also seeking public comments on the imposition of Section 301 tariffs on additional goods classified in 284 tariff subheadings which are identified in Appendix C to its Notice of Action. Written comments on the inclusion of Appendix C goods in the Section 301 action are due on July 20, 2018. The USTR will then hold a public hearing on July 24th and any rebuttal comments must be submitted by July 31st. Thereafter, the USTR will issue a formal determination on the additional products that may become subject to the Section 301 tariffs. For a complete listing of affected HTSUS subheadings, see Annex A and Appendix C to the USTR’s Notice of Action (83 Federal Register 28710, June 20, 2018).

The USTR also announced that it would entertain requests for product exclusions from the Section 301 tariffs. In reviewing exclusion requests, the USTR will consider whether a product is available from a source outside of China, whether the additional duties cause severe economic harm to the requestor or other U.S. companies, and whether the product is strategically important or related to Chinese industrial programs. When an exclusion request is submitted to the USTR, the public will have fourteen (14) days in which to file responses. Then, all interested persons will have seven (7) days in which to submit formal replies to the public comments. Exclusions will be considered and granted on a product basis, which means that the exclusion will apply to all imports of the product in question whether the importer filed the exclusion request or not. Requests for Section 301 exclusions must be submitted online via the website by October 9, 2018. If exclusions are granted, they will apply retroactively back to July 6, 2018.

U.S. Customs and Border Protection (CBP) also issued guidance to importers and customs brokers on the entry of goods subject to the Section 301 tariffs in Cargo Systems Messaging Service (CSMS)#18-000419. Specifically—

  • When Chinese-origin goods that are subject to the Section 301 tariffs enter the United States, U.S. importers are required to declare the HTSUS classifications that normally apply to the goods as well as the special Section 301 tariff classification (HTSUS 9903.88.01).
  • The 25% Section 301 duty rates do not apply to goods that are entered under HTSUS Chapter 98, such as HTSUS 9801 or 9802—in such cases the U.S. importer must declare HTSUS subheading 9903.88.01, the applicable HTSUS Chapter 98 subheading, and the Chapter 1 – 97 HTSUS classification that normally applies to the merchandise in question.
  • Section 301 duties are eligible for duty drawback.
  • Section 301 duties will apply to products from China that are entered under free trade agreements or special trade programs.
  • With respect to Foreign Trade Zones (FTZs), affected products that enter into a FTZ on or after July 6th (except for those eligible for admission under Domestic Status) must be entered as Privileged Foreign Status (PFS)—they will be subject to the Section 301 duties or any applicable quantitative restrictions upon their withdrawal from the FTZ for consumption.

In response to the Section 301 actions by the United States, China responded by imposing 25% tariffs on U.S.-origin goods classified under 545 separate Harmonized System subheadings. The affected U.S.-origin goods include agricultural products including cotton, automobiles such as SUVs and electric vehicles, whiskey, dog food and tobacco.

China customs delays clearing U.S. goods as duties loom - sources

Some major Chinese ports have delayed clearing goods from the United States, four sources said on Friday, potentially disrupting imports of key products such as pork and soybeans as the world’s top two economies head towards a trade war.

News of the delays came as Washington imposed tariffs on $34 billion of Chinese imports from 0401 GMT on Friday. Beijing has said it will retaliate with punitive measures on U.S. products worth a similar amount.

The port of Shanghai put on hold clearing some U.S. imports through customs, said an official at a company in the coastal city, which handles customs clearance for importers. He had spoken to customs officials.

There did not appear to be any direct instructions to hold up cargoes, but some customs departments were waiting until they had received official guidance from the central government on imposing hefty import tariffs on hundreds of products, the sources said.

A wine merchant in Shanghai, one of the country’s busiest trading hubs, said customs brokers were also slowing the clearance process because of confusion about how and when to implement duties.

“They’re holding everything ... because there’s uncertainty,” he said.

“But overall, this weekend they should be able to identify what the taxes are and how they should be implemented, and they should be processed as normal.”

A commodities trader in eastern Shandong province was told by customs at a major northern port that they have slowed the clearance of goods from the United States on Beijing’s list.

Delays started at midnight local time on Thursday as agents waited for official word from the central government to enforce the new tariffs, he said.

The General Administration of Customs did not comment on the delays and said the agency will implement the tariffs as announced on Thursday.

The agency said on Thursday that tariffs on U.S. products will take effect immediately after U.S. tariffs on Chinese goods kick in.

Additional Tariffs on Chinese Goods Effective July 6; Exclusions May be Requested

The Trump administration announced June 15 a list of 818 products from China that will be subject to an additional 25 percent duty as of July 6. The administration also released a list of 284 other tariff lines – not included in any previous proposal – on which additional duties could be imposed following a public notice and comment process. These tariffs are being imposed after a Section 301 investigation determined that China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory.

Companies should immediately examine these lists and conduct classification reviews of their products to determine if they are or might be affected by the new tariffs. In addition, companies should consider utilizing a process to be announced in the next few weeks to request exclusions of specific products from the tariffs.

According to the Office of the U.S. Trade Representative, the two lists focus on products from industrial sectors that contribute to or benefit from the “Made in China 2025” industrial policy, which include aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles. USTR states that the lists do not include goods commonly purchased by U.S. consumers such as cellular telephones or televisions.

See the 1st list of Products HERE

See the 2nd list of Products HERE

Chinese Retaliatory Duties Assessed on More than 500 U.S. Products

In response to the additional 25 percent tariff the U.S. began imposing July 6 on imports of hundreds of Chinese goods, the China State Council has instructed the China Tariff Commission to finalize and publish retaliatory tariffs on goods of U.S. origin entering the Chinese market. The initial tranche is composed of 545 items valued at $340 million that were hit with an additional tariff of 25 percent as of July 6. This tranche mainly includes agricultural and aqua cultural goods as well as motor vehicles. The second tranche covers 114 items, including chemical products, medical equipment, and energy goods, that will also be subject to an additional 25 percent tariff should the U.S. move ahead with plans to expand the list of Chinese goods subject to the Section 301 tariffs.

It is worth noting that the 25 percent duty will be levied on the declared value of the imported goods in addition to the normal duty charged on goods imported into China. As China Customs collects a 17 percent value-added tax on both the value of the imported goods and all the duty assessed, the VAT cost of goods affected by the additional tariffs will increase significantly.

China has stated that there will be no exemptions from the additional tariff for the bonded import and duty relief programs. As a result, for bonded goods destined for processing trade (e.g., raw materials and manufacturing inputs) for which duties are typically suspended, if the finished products are not exported the corresponding bonded import will be subject to the additional tariff. While such goods are not included in the initial tranche of China’s retaliatory tariffs, some are or could be included in the second tranche. Importers should thus consider a back-up plan or alternate sourcing to mitigate the potential duty cost.