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November 11 2019

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28 The Journal of Commerce | November 11 2019 Government IMPORTERS WHO FOR years felt com- fortable with the Harmonized Tariff System (HTS) product codes under which their goods entered the United States have been rethinking those classifications now that the Trump administration is charging duties as high as 25 percent in its trade war with China. Importers this past year have sought help, including binding rulings from CBP, on product classifications. Although US Customs and Border Protection (CBP), as well as customs brokers and attorneys specializing in product classification, can advise importers who seek to minimize the impact of Section 301 duties on shipments from China by changing their product codes, the process can be burdensome and costly. Alternatively, some companies have asked for tariff exclusions for products they regularly import from China. Members of Congress have even lobbied on behalf of importers for exclusions on specific products. About 780 exclusions have been issued so far by the Office of the US Trade Representative (USTR) under Lists 1, 2, and 3, Eric Smithweiss, partner in the law firm GDLSK, told the annual conference of the Pacific Coast Council of Customs Brokers and Freight Forwarder Associations in mid-October. The List 4 duties on about $300 billion in imports not already under tariff are scheduled to take effect Dec. 15. However, seeking relief can be complicated because CBP oversees product classifications, while USTR administers the exclusions, Smith- weiss said. "So, what is the process? You go to CBP and ask for help with USTR?" asked Tom Gould, vice president of customs and trade advisory at forwarder Flexport. "Yes, this is complicated," re- sponded John Leonard, CBP's exec- utive director for trade policies and programs. "CBP works with USTR on exclusions, so send an email to us and we'll channel it to USTR." The dialogue among customs brokers, CBP managers, and customs attorneys was a microcosm of what importers and their professional advisors have dealt with during the year-long trade war between the US and China. Partial peace The tariffs, and the uncertainties surrounding future trade policy with China, are far from over despite the "phase one, partial, skinny deal" US and Chinese negotiators reached earlier in the month, Matthew Margulies, executive vice president of the US–China Business Council, told the Western Cargo Conference (WESCCON). "Longer term, the tariffs, and the tension, still exist, so there are a lot of issues remaining," Margulies said. Beneficial cargo owners (BCOs) and the customs brokers that represent them must consider the costs and time involved in seeking to change the HTS classification of their products, or in seeking exclu- sions for their products. Cameron Roberts, a partner at Roberts & Kehagiaras, said importers must be confident that they have a legiti- mate claim for an exclusion. "This is not just something where you can fill out a form and send it in. That's why 75 percent of applications are turned down," he said. Roberts suggested that customs brokers who represent BCOs on these matters may want to monetize their efforts. "Brokers should charge a fee for the detailed work they do on this," he said. If anyone is benefiting from the Section 301 tariffs, and the Section 232 tariffs on steel and aluminum, it is the US Treasury. "Tariff collec- tions will more than double this year because of the Section 232 and 301 tariffs," Leonard said. JOC email: twitter: @billmongelluzzo "What is the process? Go to CBP and ask for help with USTR?" USTR has issued roughly 780 tariff exclusions for Chinese-made goods now subject to higher tariffs. Flystock / International | Washington | Customs | Security | Regulation Some exclusions apply US import tariffs can be avoided sometimes, but at a cost By Bill Mongelluzzo

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