Section 301 tariff exclusion extensions

The Office of the U.S. Trade Representative extended for another six months to Nov. 30 its Section 301 tariff exclusions on 81 COVID-19 related product classifications from China that were due to expire at midnight Tuesday, said an agency notice late Friday afternoon. It was USTR’s second six-month extension on the import classifications covering “medical-care and/or COVID response” products, it said. “In light of the continuing efforts to combat COVID–19,” USTR determined that a six-month extension was “warranted,” it said. The decision took into account public comments previously provided, plus input from industry advisory committees and the interagency Section 301 committee, it said.

The Office of the U.S. Trade Representative notified Sonos it got extension through Dec. 31 of the exclusion from the List 4A Section 301 tariffs on speaker imports from China, said the company in a Thursday SEC filing. The exclusion extension eliminates the 7.5% tariffs until year-end. Sonos sources the speakers under the Harmonized Tariff Schedule's 8517.62.0090 subheading for a wide swath of Bluetooth goods, one of 87 categories granted USTR extensions Aug. 31 (see 2008310033). Sonos, whose exclusion was granted in March (see 2005110034), has begun the process of seeking refunds for the $30 million in tariffs paid through July, said Chief Financial Officer Brittany last month (see 2008060030). The company is continuing plans to diversify its supply chain into Malaysia, Bagley said on the August call. Sonos turned to Malaysia to reduce exposure to the tariffs on Chinese-sourced wireless mesh networking audio components. The company planned to have “significant” U.S.-bound production from Malaysia ramped up by Dec. 31, but due to COVID-19-related government restrictions on manufacturing in Malaysia, reaching scale will take until mid-2021, Bagley said.

The top Republican on the House Ways and Means Committee supports extending Trade Act Section 301 tariff exclusions on Chinese imports automatically instead of through burdensome notice and comment proceedings, he told reporters Wednesday. The Trump administration should alleviate “the energy and effort that businesses have to undertake to extend these exclusions right now when they frankly have bigger fish to fry,” said Rep. Kevin Brady, R-Texas. He said he expressed his views to U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross. Brady supports bipartisan legislation sponsored by fellow Ways and Means member Rep. Jackie Walorski, R-Ind., and House Agriculture Committee Chairman Collin Peterson, D-Minn., that would direct USTR to extend expiring exclusions for at least a year, but would give the agency some discretion when it disagrees (see 2007170050). U.S. businesses should be “focused on surviving” the COVID-19 pandemic and keeping people employed instead of scrambling to find non-Chinese sourcing or arguing for an exclusion extension, Brady said. USTR and Commerce didn’t comment Thursday.

Bipartisan legislation would direct the Office of the U.S. Trade Representative to extend expiring exclusions on Trade Act Section 301 tariffs on Chinese goods for at least a year. Thursday's bill, sponsored by Rep. Jackie Walorski, an Indiana Republican on the Ways and Means Committee, and House Agriculture Committee Chairman Collin Peterson, D-Minn., would give USTR some discretion. It would exempt the agency from the extension requirement on any product deemed to be important to the Made in China 2025 industrial program or if extending the exclusions would cause “severe harm” to the U.S. USTR would have 15 days from enactment to give Ways and Means and the Senate Finance Committee "detailed justification" for any exemption. The practice has been to extend expiring tariff exclusions through a series of notice and comment rulemakings (see 2007150051). USTR didn’t comment Friday.