Market Letters

CHB Update – Week 51, 2020

Section 301 (China Tariffs) Exclusions: Protests and Expirations

CBP issued guidance earlier this year indicating importers must file protests on certain entries to preserve their right to exclusion refunds. These protests would apply in situations where exclusions were granted after an entry containing eligible products/HTS codes had already liquidated. The DOJ (Department of Justice) recently reaffirmed this guidance. It is extremely important for importers to work with their Customs Broker or Trade Lawyer to ensure they have taken all steps necessary while the protest window is open, as any recourse after it closes will be almost impossible to obtain.

Those who remember when each Section 301 List was implemented, and the additional duties assessed, will recall the ‘which date matters?’ game. Now that we have reached the final large exclusion expiration date, importers are asking the very same question again. Vessel congestion and delays are the cause of concern this time, as several cargo carrying vessels sit at anchor, waiting to berth just off the US coasts. The exclusions expire 12/31/2020, and additional duties will once again be applicable on 1/1/2021. What if cargo is still waiting in the harbor? What’s the ‘arrival date’ for customs clearance purposes if the vessel is sitting and waiting, but not yet berthed? Trade organizations have reached out to US Customs to request that vessels anchored past the breakwater be considered ‘arrived’ by 12/31/2020, to allow for use of Section 301 exclusions on US Customs entries. This is an unprecedented request and Customs officials have yet to respond. If the request is denied, many importers will miss out on their last opportunity to capitalize on exclusions before they expire.

Other Expirations and a Potential Government Shut Down

In addition to the many Section 301 Exclusions, GSP (Generalized System of Preferences) and MTB (Miscellaneous Tariff Bill) are both set to expire at the end of the year. These are typical expirations, as both are reviewed annually, then extended. If there is a lapse in the agreements, US importers will be on the hook for additional duties on goods which arrive the US and clear customs during this time.

Additionally, if Congress does not reach an agreement on government spending, we are facing a potential government shutdown Friday, December 18th. This would mean all non-essential government employees would be furloughed or forced to work without pay until an agreement is reached. We experienced the longest government shut down in modern US history from December 208 through January 2019. We hope not to see a repeat this year.

Movement of cargo is considered essential, but with staff reductions, importers should expect delays in customs clearances and any other US Customs work or services. Exams, approval of protests, resolutions of fines and penalties, etc. are at risk to be back-logged until operations are fully up and running again.

Please contact Ashley Coxey, National Director of Business Development, Customs Brokerage or your Laufer representative for more information on any topic discussed in this week’s market letter. We have a team of experts on staff who would be happy to help you navigate the complexities of these scenarios