China Tariff Exclusion

China Tariff Exclusions Extensions Expired

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China tariff exclusions extensions have now expired. Approximately thirty-five percent of companies facing additional U.S. tariffs on imports from China had qualified for the China tariff exclusions. The tariffs were imposed by President Trump in 2018. The exclusions equaled about $3.2 billion in tariff relief for importers. Most of of the tariff exclusions were allowed on machinery, mechanical appliances, electrical equipment, plastics and rubber goods. These exclusions were meant to avoid harm to American interest.

Chinese goods were categorized into four U.S. Trade Representative (USTR) Section 301 lists that were allowed to apply for tariff exemption. Thirty-seven batches of exemptions were granted. Exclusion requests were evaluated on the following:

  • Whether the particular product was available only in China
  • Whether the imposition of additional duties would cause severe economic harm to the requestor or other U.S. interests
  • Whether the particular product is strategically important to the “Made in China 2025” (MIC 2025)

China Tariff Exclusions Affect Products Made in China

Made in China 2025 is an industrial plan that China introduced in 2015 in increase its economic success in the following industrial industries:

  • IT
  • Energy-efficient vehicles
  • Robots
  • Energy equipment
  • Aerospace
  • Agriculture machines
  • High-tech ships
  • New materials
  • Advanced railway equipment
  • Biopharma
  • Medical devices

By 2025, China hopes to boost manufacturing quality, innovation, and labor productivity; obtain an advanced level of technology integration; reduce energy and resource consumption; and develop globally competitive firms and industrial centers.

Due to COVID-19, some medical care products have been allowed to continue with the exclusion through September 30, 2021. Therefore, they will not be charged additional tariffs for the products being shipped to the U.S. from China.

Items included were things such as medical items, including ventilators, oxygen masks, nebulizers, face masks, surgical drapes, medical gowns, and gloves.

This does not allow for broader tariff relief. The expiration will result in an approximate increase in tariff rates by 1.8 percent. This is a significant amount that will have a heavy financial burden on companies facing this situation.

How ITC Can Help Offset Tariffs

ITC can help companies offset the impact of tariffs by importing products to our U.S. FTZ (Foreign Trade Zones). Foreign Trade Zones are secure areas under U.S. Customs and Border Protection supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry, they are the United States’ version of what are known internationally as free-trade zones. Utilizing FTZs will allow companies to delay paying tariffs on goods imported into the U.S. – helping them to maintain critical cash flow. Additionally, some products manufactured in FTZs will only be tariffed on raw materials.

OUR FTZ consultants provides trade related services to importers, exporters, manufactures, distributors, and local government, focusing on Customs & Border Protection issues and Foreign Trade Zones business.