Tariffs on All Remaining Imports from China to Begin Sept 1 along with the exemptions with no grace period

President Trump has announced that beginning Sept. 1 he will impose a 10 percent additional tariff on virtually all of the remaining $300 billion worth of goods imported from China that are not already subject to Section 301 tariffs (List 4 goods).

Initial indications are that the 10 percent tariff, which would be in addition to any other applicable tariffs, will be applied on the entire list (See attached “USTR 301 Proposed List 4”) of 3,805 full and partial subheadings announced in May. The Office of the U.S. Trade Representative said at that time that this list covers all apparel, footwear, and manufactured textile products, among others, but excludes pharmaceuticals, certain pharmaceutical inputs, select medical goods, rare earth materials, and critical minerals. A Federal Register notice providing additional clarifying details is expected shortly.

Based on experience with List 3 goods, it is not expected that requests to exclude specific products from List 4 will be accepted while the tariff rate remains at 10 percent. If this rate is increased to 25 percent, which could happen if the administration deems it necessary to gain additional leverage in the ongoing U.S.-China trade talks, an exclusion process could be established.

The Office of the U.S. Trade Representative has issued a notice stating that the additional 10 percent tariff on List 4 imports from China will not be imposed on certain products that were removed for health, safety, national security, and other factors. A list of these products is available here. (See attached “USTR 301 Products Removed from List 4)
Additionally, the tariff will be delayed until Dec. 15 for products on List 4B. Those products are in the following tariff groups: cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.
For products on List 4A, the tariff will go into effect Sept. 1. USTR also intends to conduct an exclusion process for products subject to the tariff.
- USTR List 4A (effective Sept. 1, 2019)  (see attached “List 4A Effective Sept 1, 2019”)
- USTR List 4B (effective Dec. 15, 2019)  (see attached “List 4B Effective Dec 15, 2019”)

The following additional details concerning the Section 301 additional 10 percent tariff that will be imposed on List 4 goods imported from China have been made available by the Office of the U.S. Trade Representative.
- The tariff on List 4A goods (see attached “List 4A Effective Sept 1, 2019”) will be applicable to products entered or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Sept. 1. Such goods must be entered under HTSUS 9903.88.15.
- List 4A includes HTSUS numbers for which China’s share of U.S. imports from the world is less than 75 percent.
- The tariff on List 4B goods (see attached “List 4B Effective Dec 15, 2019”) will be applicable to products entered or withdrawn from warehouse for consumption on or after 12:01 a.m. EDT on Dec. 15. Such goods must be entered under HTSUS 9903.88.16.
- List 4B includes HTSUS numbers for which China’s share of U.S. imports from the world is 75 percent or greater.
- 25 HTSUS numbers (See attached “USTR 301 Products Removed from List 4) proposed for inclusion on List 4 have been removed based on health, safety, national security, and other factors.
- Any List 4A or 4B product eligible for admission under domestic status that is subject to the 10 percent tariff and admitted into a U.S. foreign-trade zone on or after the effective date of that tariff may only be admitted as privileged foreign status.
- The 10 percent tariff does not apply to List 4A or List 4B goods for which entry is properly claimed under a provision of HTSUS Chapter 98, except for goods entered under HTSUS 9802.00.40, 9802.00.50, 9802.00.60, and 9802.00.80. For HTSUS 9802.00.40, 9802.00.50, and 9802.00.60, this tariff applies to the value of repairs, alterations, or processing performed abroad. For HTSUS 9802.00.80, the tariff applies to the value of the article less the cost or value of such products of the U.S.

Made in Vietnam or Made in China?

To get around the punitive tariff treatment, Vietnamese officials say China is intentionally mislabeling its products as "made in Vietnam".

"Dozens" of products have been identified, Hoang Thi Thuy, a Vietnamese Customs Department official, stated in Media, and goods like textiles, fishery products, agricultural products, steel, aluminum, and processed wooden products were most vulnerable to the fraud. "It will sabotage Vietnamese brands and products and it will also affect consumers. We could even get tariff retribution from other countries, and if that happens, it will hurt our economy," Foreign Minister Pham Binh Minh told the Vietnamese National Assembly last week.

Marking of the country of origin is super important in the importing It could be easy but it could be very complicated sometimes. For instance, phones and other electronics are tricky to have an origin country. You have a South Korean camera and RAM, a Japanese screen, a Taiwanese SOC, using Chinese PCB and miscellaneous electrical components (resistors, capacitors LED's, diodes, etc). All the components put together in Vietnam with American software on top. What is the country of origin? The thumbs of rule for determining the country of origin in 19 CFR Part 134.1

"If the article in question is not wholly manufactured, produced, or grown within a single country, then we must consider the source or origin of any component or material that is used in the manufacture, production, or assembly of the good, and whether the further work or material added to an article in a subsequent country effected a “substantial transformation” on that part, component or material, so as to render such other country the “country of origin” of the end product. "

***substantial transformation is a processing of foreign input result in an article with a new name, charter or use ***

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Keep your financial transaction record and Country of Origin certificate

My current company has a coffee trading company importer client who sources coffee beans worldwide, particularly in GSP or Tariff preferred countries. Even importation document fully complained, the U.S custom still selects some shipment to the exam. One time they bring in coffee beans from Nicaragua in Central American and claim Dominican -Republic-Central America ( CAFTA-DR). The U.S custom sends a notice of action to request more information for this entry even it was admitted to the US 3 months ago. To properly trace back the growth in Nicaragua, the U.S Custom looks for affidavits from the growers of the product, as well as any affidavits from any middle-men (if a cartage company was used, etc.). In this case, a proof of payment transaction, such as check copy or wire transfer copy to manufacture, can be sufficient documentation to prove the product origin. Good that the importers keep the financial transaction record well. So the payment proof together with the country of origin certificate, they are well accepted by U.S custom.

The consequence of failure to mark COO

• CBP Officials may demand re-delivery and remarking to CBP custody at importer's cost even the shipment is released and admit to USA.
• Articals not properly marked will be subject to additional 10% of duties of final apprised value.
• CBP will issue liquidated damages to importers if the products cannot be redelivered
• Up to $5000 or 1 year imprisonment for any intentional removal, defacement, destruction or alteration of a marking of the country of origin.
• Increase the chance to exam importer;s subsequent shipment.

Country of origin marking is always one of the top focus in CBP checking list, particularly if the entry is related to Antidumping/Countervailing, quota/ Visa restriction, NAFTA, GSP, tariff preferential agreement, government procurement, etc. If any of these is being claimed, please make sure you have the certified country of origin ( the exporter can apply it from Chamber of Commerce), a properly formatted invoice with the country of origin word stuffing and consolidation parties that make sense to U.S Custom. The more completed information you can pass to your broker, the better chance you will have shipment clear in a timely manner.

Have questions? Let us chat!

By: Coco Yang / Licensed Customs Broker; ALTJFK Offices