The past six months have put a strain on everyone in America and by all measures we are not out of the COVID woods yet. International trade was expected to take a large and lasting hit but surprisingly both exports and, especially, imports have remained strong. Ports around the country are reporting record months and, even with so many employees working from home, Customs and other governmental agencies have continued to handle the workload to keep cargo moving. Certainly, there have been challenges, but agencies such as the Food and Drug Administration really stepped up to meet the crisis.
During this period, both the Office of the US Trade Representative and the Department of Commerce have also stayed busy. The USTR issued several extensions for Section 301 (China) tariff exclusions though most of these exclusions expired. On the busiest day, August 7, nearly all the exclusions tied to Round 3 of these tariffs came to an end. This was followed by a lawsuit filed with the Court of International Trade arguing that required regulatory procedures were not followed in implementing Round 3. Should this lawsuit be decided in favor of the plaintiffs, it would follow that the same is also true for Round 4A and would trigger duty refunds for all the plaintiffs. This would also present an opportunity for other importers to apply for refunds on at least some of their entries.
Most of the remaining exclusions for the Section 301 tariffs on Chinese products are scheduled to expire on December 31, and we expect the USTR to solicit comments from concerned parties soon. Extensions will not be granted unless requested and even then, most of the exclusions will certainly be allowed to expire.
Recently, the USTR has opened a Section 301 investigation involving Vietnam. The investigation is focused on currency manipulation and possible violations related to the importation of timber. After the Section 301 action was taken against China, many companies moved production to Vietnam which resulted in a steep increase in our trade deficit. If determined that such an action is warranted, you can expect discussions and negotiations to forestall the implementation of any additional tariffs. Since Vietnam has become a significant exporter of wood products including furniture to the US, we will closely monitor the developments of this investigation.
In January, a major expansion of the Section 232 tariffs on steel and aluminum products was announced. This action brought certain derivative products such as automotive body stampings and fasteners under the scope of the tariffs. An August 6th proclamation partially rescinded an exemption granted to Canada for the tariffs on aluminum and reimposed a 10% tariff on non-alloyed wrought aluminum articles. This move was a little surprising coming so close to the July 1 implementation of the much anticipated USMCA trade agreement with Canada and Mexico.
At the Commerce Department the volume of new Antidumping and Countervailing Duty (ADD/CVD) cases continue at a record pace. Most recently, we have seen new cases involving aluminum foil and textured polyester yarn. These cases follow many other varied products embroiled in ADD/CVD investigations in 2020. ADD/CVD cases are a big concern to importers due to the potential for exceptionally high additional duties and the uncertainty of the rates to be applied.
The seemingly popular Generalized System of Preferences, GSP, program also has a December 31 expiration date looming. This agreement allows importation of selected goods from developing nations at a reduced or duty-free rate. Historically, this 44-year-old program has garnered bipartisan support in Congress and has never failed a renewal, even if it was done so retroactively. Only Congress, with the signature of the President, can authorize the renewal. Many civic and industry groups have encouraged a long-term renewal this time around. Trade Representative Robert Lighthizer stated recently that the program needs to be reviewed for possible improvements which brings the timetable into question. Last year, both India and Turkey lost their GSP status, though it is possible that India’s could be reinstated at some point.
The complexity associated with international trade continues to grow and we at CVI strive to keep our clients appraised of changes that may affect their business. We look forward to the upcoming quarter with hope that we are on our way out of the pandemic and that our customers will find more success along the way.
Sam McClure, LCB
Director of Compliance & Customs Services
Need a refresher on tariff rounds and exclusions?
CVI has a free, complete guide to EVERYTHING you need to know for tariff rounds and exclusions, including:
- HTS Code
- Publish Dates
- Exclusion provision number per set list and round
- Effective & Extended Expiration Dates
The CVI Exclusion Guide 2020 provides you with a link to original USTR exclusion announcements with a breakdown of each excluded product.
Please let us know if you have any questions. We will be regularly updating this document via our website. Check it out here!
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Meet one of CVI’s Customs Brokerage & Compliance experts, Sam McClure:
Sam serves as Director, Compliance and Customs Services for CVI. He serves as CVI’s corporate compliance officer and is responsible for overseeing all aspects of our Customs related services, including growth.
Sam started his career in 1977 with Waters Shipping Company in Charlotte, NC. He began as a document runner, soon becoming a leader in operations and customer service for the branch. Sam, along with Linda Masten, founded Central Carolina Shipping Inc. in 1983 as an independent Customs Brokerage firm where he served as Vice President for 26 years. Sam and Linda grew Central Carolina into a successful and highly respected member of the Carolinas trade community. When Charlotte opened their local chapter of the IFFCBA Sam was part of the organizing group and he headed the Customs committee for several years. Sam obtained his Customs Brokers License in 1984 and remained with Central Carolina until the company was acquired by CVI in 2009.
At CVI, Sam has held several positions in both the operations and sales departments. As an expert in U.S. Customs regulations, Sam is often called upon on to provide guidance to importers on Customs compliance issues. He makes regular presentations on matters related to importation and broader regulatory compliance.
– Sam McClure, LCB, Director of Compliance & Customs Services, CVI
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