Following the announcement by the President on August 1st of his intention to impose Section 301 duties on remaining exports from China, the trade has been waiting for clarification from USTR what would actually happen. On August 13th, the USTR published their intentions – two lists, a 4A and 4B, would be subject to 10% additional Section 301 duties. The effective dates for these two lists would be September 1, 2019, and December 15, 2019, respectively. Not yet published as of this writing, the full text of the intended Federal Register notice and HTS list can be viewed and downloaded here.
The trade had been cautiously optimistic that the September 1st date would be for goods exported on or beforehand, allowing ocean freight shipments of products on the 4A list to be exported before the 10% additional duty was applied. Unfortunately, the proposed Federal Register notice says it is for merchandise entered or withdrawn on or before September 1st, meaning that likely only cargo en route for west coast ports in the coming days will make it in time. There is still an opportunity for air cargo and we will be working with our partners in China and Hong Kong to monitor space and if there is a surge in rates between now and the end of the month.
There are a few bright spots that have emerged as the week progressed. First, that there will be an exclusion process for items on list four as there has been on the previous three lists. Second, there are many items which were exempted from both lists including items like port cranes. And perhaps with the dividing of this list into two parts, the items on the 4B list like smart phones, video game consoles and many footwear and apparel items will be spared by the Administration as we get closer to the deadline and, perhaps, closer to some kind of agreement. November is when the annual APEC conference takes place and if a solution isn’t found before then, maybe an announcement would be forthcoming then.
We have published below two charts CBP put into a recent message to the trade. The entire CSMS message is available online here.