Reducing Section 232 and 301 Duties
How can I lower or reduce the duties incurred on goods under the Steel/Aluminum (Section 232) or goods made in China (Section 301)?
There are many compliant ways an importer can attempt to lower the duties that may be charged under the new Trade Remedies implemented in 2018:
Products can be reviewed for the exclusion process by the Department of Commerce (Section 212) and the Office of the U.S. Trade Representative (Section 301). They have also finalized different lists of items that have been approved for exclusion from these additional duties. Here are some links to various information on exclusions and product listing for goods already approved for exclusions:
- Department of Commerce guide for the exclusion process*
- Office of the U.S. Trade Representative information on navigating the tariffs and exclusions process*
*It is our opinion that you consult with a trade attorney, as they are best equipped with the knowledge and expertise to guide you through this complicated process. Farrow has trade attorneys we can recommend.
Product Tariff Exemptions
Some products will be exempted from the higher tariffs based on specific criteria, or has been previously imported. Items returning to the U.S. within 3 years after exporting from the U.S. (regardless of the original country of manufacture), goods entering the U.S. temporarily, or goods returning from a foreign country after repair may be eligible for duty free provisions under Chapter 98 of the U.S. HTS.
Goods valued at less than $800 USD or below are eligible for entry exemption. If goods are low valued, the importer can request them to be released under ‘Section 321’. Although this is not eligible for any goods under section 232 (Steel/aluminum), this deminimis rule is available for section 301 (Made in China) duties. Please note that there are some partnering government agency goods (PGA) that are ineligible for this type of entry exemption.
This is not an all-encompassing list, but it gives a high level overview of some strategies that can be used, compliantly, to lessen the burden of duties levied via the section 232 and section 301 duties.
Drawback is a potential refund of up to 99% of the duties paid on goods imported that are subsequently exported. Although the section 232 duties are ineligible for drawback, drawback is available for the section 301 duties.
Country of Origin Exemptions
Depending on the components, parts, or subassemblies involved in a finished product, taking a close look at the source material and where it was manufactured could lead you to where a product was completed in a country that is not under the Section 232 or 301 duties. Understanding the full supply chain of your finished product is good practice along with a working knowledge of the rules of origin.
Valuation is defined as the ‘price paid or payable’ between the exporter and the purchaser of an import transaction. Utilizing the First Sale rule has the potential to save importers a significant amount of duty every year. Additionally, there are various methods of appraisement in determining the value of a shipment; taken in order once it is determined the previous one is not acceptable:
- Transaction value
- Transaction value of identical merchandise
- Transaction value of similar merchandise
- Deductive value
- Computed value
It is important to understand what the included or excluded value allowances are in determining the correct value of the merchandise. This can cause higher costs of duty if the valuation determination is incorrect. See this guide to help understand correctly appraising your goods.
Products entering the U.S. temporarily (TIB) or for transport through to another country under a Transportation and Exportation bond (T & E) are not subject to the section 232 or section 301 duties.
Other items that are being sent into the US can be entered into a bonded warehouse or Foreign Trade Zone (FTZ).If a product is entered into an FTZ under privileged foreign status, it will retain the classification and condition it was imported under even if the good is manufactured into a product that is affected by the additional duties.
Products entered into a bonded warehouse can be kept there for up to 5 years, provided they are directly exported from the warehouse or entered for consumption. Duties are due upon withdraw from the warehouse.
If you should have any questions or need to talk to someone further about these strategies please contact the Farrow U.S. Trade Compliance Group via email: firstname.lastname@example.org.
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