Americans for Free Trade: Clock is Ticking on China Tariff Exclusions Renewal

Date: Thursday, August 3rd, 2023
Source: Sourcing Journal

The U.S. Trade Representative (USTR) is running down the clock on a decision regarding the continuation of China tariff exclusions, and a coalition comprised of dozens of trade groups is urging Ambassador Katherine Tai to address the issue promptly.

Formed in 2018, Americans for Free Trade includes about 170 associations that represent brands, retailers, manufacturers, farmers, technology firms, energy companies and other supply chain stakeholders. The collective on Thursday released an open letter the Ambassador Katherine Tai asking that she address the forthcoming expiration of tariff exclusions, along with subsequent Covid exclusions, on Sept. 30, preferably by opting for their continuation.

“In the last five years, American importers, including members of our coalition, have paid more than $183 billion in Section 301 tariffs on products imported from China,” it wrote. “The product exclusions granted to date have provided limited relief for some companies over this time.”

However, the USTR has not yet issued a decision on whether the exclusions will be renewed, as they were last December, and that uncertainty is coming at a cost. “As USTR is fully aware, American businesses make their supply chain and sourcing decisions many months in advance of products arriving here in the U.S.,” signatories like the Accessories Council, the American Apparel and Footwear Association (AAFA), the Footwear Distributors and Retailers of America (FDRA), the California Retailers Association, the Consumer Brands Association, the National Retail Federation and the Travel Goods Association wrote.

“Since the tariffs have been in place, exclusion extensions have been announced routinely at the last-minute—sometimes within mere days of the exclusions being set to expire,” they added.

The habitual tardiness of these decisions has created planning issues for companies looking to nail down their sourcing strategies. Americans for Free Trade said that issuing earlier extensions would help U.S. enterprises maintain a competitive edge, noting that the information is vital for those importing goods from China without a domestic option or sourcing alternative. “Failure to provide early and timely information undermines the Administration’s state goals of ensuring supply chain resiliency,” the letter said.

Protracted decision-making and communication could also harm consumers, the coalition said. “Any delay in announcements regarding the exclusions extension or expiration compels American companies to incorporate 25 percent price increases into product lines that may soon be without a Section 301 tariff exclusion,” it wrote. “Upward pricing pressure of this kind will continue to exacerbate inflationary pressures on American companies and the U.S. economy.”

In addition to pushing for a speedy extension, it renewed a request for a more robust exclusions process to be available for all items covered by the tariffs on China-made goods, allowing businesses to apply for targeted relief. “We also call upon USTR to finalize the results of the four-year statutory review of the 301 tariffs,” the letter read. The public comment period for the review, which began in 2022, closed more than six months ago, and Americans for Free Trade was among hundreds of organizations and companies that offered its insights.

Members of Congress on both sides of the aisle have been applying the same pressure for more than a year. On July 19, the USTR provided responses to written inquiries submitted by senators during a Senate Finance Committee meeting in March, asking for the status of the review and a timeline for its completion. Tai stated that the review of the Section 301 tariffs would be closed “this fall.”

“As part of the four-year review of the Section 301 tariffs, USTR is reviewing the effectiveness of the tariffs in achieving the objectives of the investigation, as well as the effect of the tariffs on consumers, workers, and the U.S. economy at large,” she said. “As part of this review, we are considering the existing tariffs structure and how to make the tariffs more strategic in light of impacts on sectors of the U.S. economy as well [as] the goal of increasing domestic manufacturing.”

[Read from the original source.]