Now Is the Time for Importers to Determine Eligibility for Section 301 Tariff Refunds

As the global supply chain continues to adapt to ongoing disruption, shippers are facing extensive challenges to keep goods moving, meet customs requirements, and manage costs. Furthermore, according to a January 2022 C.H. Robinson survey, 62% of shippers said pressure to reduce costs is one of their top three pain points. As the United States Trade Representative (USTR) assesses Section 301 duty exclusions and Congress attempts to finalize the U.S. Innovation and Competition Act, shippers have an opportunity now toreview recently reinstated tariff exclusions and determine if they are eligible for significant cost savings.

A Brief Background and Timeline

In 2018, the USTR implemented Section 301 tariffs by order of the President based on the determination of China’s unfair trade practices. These tariffs impacted $550 billion worth of goods imported from China and have, thus, resulted in significant economic obstacles for some shippers.

In late 2021, the USTR began the process of evaluating 549 specific product exclusions with the possibility of granting extensions. Most of these product exclusions expired as of December 31, 2020. Following a public comment period, which concluded on December 1, 2021, the USTR completed an in-depth review of submitted comments with the advice of advisory committees, the interagency Section 301 committee, and the White House COVID-19 Response Team.

On March 23, 2022, the USTR announced it would reinstate more than 350 previously expired Section 301 China duty exclusions through the end of this year, with retroactive application to October 12, 2021. The reintroduced exclusions apply to any product that originates in China and meets the criteria outlined in the exclusion language, regardless of who is importing. Many of the products are used in the heavy machinery and automotive industries.

As of May 5, 2022, the USTR has also initiated a four-year review process, evaluating the effectiveness of the Section 301 China tariff actions against their initial purpose—protecting national security. Representatives of domestic industries that have benefited from these tariff actions were invited to submit their requests for continuation on the USTR’s comment portal until the closing period for each associated tranche. The review process will either continue, modify, or end Section 301 China tariffs.

Now What?

Per the USTR’s March 23^rd announcement, these reinstated exclusions open more than $1 billion in refund potential for shippers. Shippers should act now to identify eligibility and begin the long process of applying for duty refunds, as amounts have proven to be significant.One C.H.Robinson customer alone has the potential to reclaim$19.5 million in duty refunds.

Details for Requesting a Section 301 Refund

To request a refund of Section 301 duties paid on previous imports of products granted duty exclusions by the USTR, importers may file a Post Summary Correction (PSC) if within the PSC filing timeframe—up to 15 days prior to the scheduled liquidation date, which is generally 300 days from date of entry summary filing. If the entry is beyond the PSC filing timeframe, importers may file a protest if within the protest filing timeframe, which is 180 days following liquidation of the impacted entry.

As reinstated exclusion refunds are available only for products that are included in the exclusion language, importers requesting arefund for previously paid duties—whether through a PSC or protest—must provide supporting information to CBP (e.g., product literature, descriptive illustrations, product specifications, etc.) and correlate this information clearly and accurately to each applicable entry line(s) to ensure proper filing.  

Shippers can expect a high level of scrutiny by CBP during the documentation review. Shippers must ensure PSC or protest paperwork is organized and clearly conveyed when uploading this documentation to CBP or providing this documentation to a customs broker for uploading. Providing as much detail and context as possible to CBP is critical as the reviewer may deny the request if they have any questions.

There are tools available to help shippers easily understand their duty recovery potential, such as C.H. Robinson’s U.S. Tariff Search Tool. Shippers can input their organization’s HTS code and receive information about their eligibility under the tariff exclusions and better understand their total landed cost. The tool identifies opportunities for shippers to determine exclusion opportunities by using the 10-digit tariff classification codes which are taken directly from both the United States International Trade Commission (USITC) and all duty exclusion notices published by the USTR—including the most recent notice from March 23, 2022.Learn how to use the U.S. Tariff Search Tool.

Other Potential Upcoming Tariff Changes

Shippers may have additional opportunities to collect refunds on Section 301 China duties paid to CBP under the Senate’s U.S. Innovation and Competition Act (USICA). The bill would reinstate all previously expired duty exclusions from the date of passage of the legislation through December 2022. Additionally, a considerable number of duty exclusions would be retroactively reinstated to January of last year.

The USICA and the America COMPETES Act—the U.S. House of Representatives’ response to the Senate’s USICA—are both under deliberation, and Congress will need to compromise between the bills before a final bill can head to President Biden’s desk for consideration. While pressure on the administration to eliminate tariffs is growing as inflation rises, Biden remains adamant that his office will review each tariff one at a time ahead of his decision.

In Conclusion

While the future of Section 301 China duties remains unclear, tariffs remain a hot topic in the trade community. Shippers affected by the recent USTR Section 301 exclusions should aggressively investigate their refund potential now to minimize duty exposure and maximize cost-saving potential. As some industry experts expect the Section 301 tariffs to remain in effect, importers should not miss out on this opportunity as a strategy to reduce their total landed cost.