The Office of the U.S. Trade Representative is publishing three new sets of product exclusions from the 25 percent Section 301 tariffs on goods from China (see 1909180004). The product exclusions apply retroactively to when each tranche initially took effect. That was July 6, 2018, for the first tranche, Aug. 23, 2018, for the second tranche and Sept. 24, 2018, for the third tranche. The notice for the third tranche also includes "technical amendments" to lists three and four of the Section 301 tariffs that appear to end double counting of Section 301 tariffs on goods tariffed at a rate that comes from another subheading.
Section 301 (too broad)
Twenty-three trade associations, led by the National Foreign Trade Council, have sent a letter to the leaders of the House and Senate committees with trade jurisdiction, asking them to hold public hearings on tariffs proposed by President Donald Trump, and telling them the Tariff Reform Coalition wants to "work with you to pass appropriate tariff reform legislation as soon as possible."
The Office of the U.S. Trade Representative issued three new sets of product exclusions from the 25 percent Section 301 tariffs on goods from China. The exclusions include products from the first three lists of Section 301 goods. The new exclusions from the first tranche include "310 specially prepared product descriptions" and cover 724 separate requests, according to the notice. The second tranche exclusions include 89 product descriptions and covers 400 requests, while the third tranche exclusions include 38 product descriptions that cover 46 exclusion requests, the agency said.
International Trade Today is providing readers with some of the top stories for Sept. 9-13 in case they were missed.
S&P Global Ratings is “fairly confident” that tech manufacturers Flex and Jabil “could manage their metrics to preserve” their current “BBB-“ ratings if the List 4 Section 301 tariffs stay at 15 percent, the financial analytics firm said Sept. 13. But in a 30 percent tariff “scenario,” as the first three tariff rounds are scheduled to rise to Oct. 15, the potential EBITDA declines “could prove to be too severe” for either company to avoid a ratings downgrade, S&P said. "Flex and Jabil could be the canaries in the coal mine when it comes to the effects of another round of tariffs on the technology hardware sector," S&P said in a news release. Before any downgrade, “we would consider each company's tariff mitigation and balance sheet management strategies,” it said. “If we believed credit metrics were likely to exceed our downgrade thresholds over a 24 month period, we could lower the ratings.” It estimates that goods representing 6 percent to 9 percent of Flex's revenues and 12 percent to 17 percent of Jabil's sales will have exposure to the four rounds of tariffs, it said. “Neither company discloses these figures so we estimated them based on a review of revenue by geography for each of the customers they name in their annual reports,” it said. Jabil’s largest customer, Apple, draws 37 percent of its revenue from U.S. sales, it said. For Flex, the largest customer is Ford, which draws 61 percent of revenue from the U.S., it said. In fiscal 2019 ended March 31, 25 percent of Flex revenue came from manufacturing operations in China, it said. It estimates that Jabil derives 40 percent to 50 percent of its revenue from Chinese production, it said. Flex and Jabil didn’t comment.
The Customs Rulings Online Search System (CROSS) was updated Sept. 13. The most recent ruling is dated Sept. 12. The following headquarters rulings not involving carriers were "modified" on Sept. 13, according to CBP:
The Office of the U.S. Trade Representative has granted about 35 percent of the roughly 15,000 requests it received to have products excluded from Section 301 tariffs on Chinese imports, customs expert John Brew with Crowell & Moring told a Sports & Fitness Industry Association webinar on Sept. 12. “Frankly, there’s a bit of subjectivity in the requests that we’ve seen granted so far,” Brew said. “Sometimes it’s hard to make sense of what’s happening. Part of that is because I think the USTR is overwhelmed. They have tens of thousands of requests and only a few people working on them.” Brew recalled a client which got USTR notification that its exclusion requests had been denied, only to find out later in a Federal Register notice that all had been granted. “Things like that happen, and you just never know how USTR is going to decide, unfortunately,” he said. There’s no exclusion process “yet set” for the List 4 tariffs, Brew said. “That should be coming at some point in the near future. We just don’t know when that’s going to happen.” USTR didn’t comment.
CBP is planning to put out some more information about the power of attorney requirements for customs brokers filing Type 86 entries, a CBP official said during a Sept. 12 call with software developers. The agency's Type 86 test notice (see 1908120019) mentions that CBP is "requiring that consignees intending to file an entry type '86' appoint a customs broker to act as the importer of record (IOR) for the shipment" and that "customs brokers must be designated to enter qualifying shipments through a valid power of attorney." While filing Type 86 entries is considered "customs business," CBP's "intention was not to have a broker go out and get thousands of powers of attorney when they're doing these type of shipments," the CBP official said. "So we are working with our attorneys to get some kind of clarification out there of what we mean by 'power of attorney,'" she said. For Type 86 entries that are subject to the Section 301 tariffs on China, CBP does not "expect" the filer to include Chapter 99 tariff numbers that are required for other entries with Section 301 goods, the official said.
President Donald Trump has “overstepped his power” to impose Section 301 tariffs on Chinese goods, “and our nation’s businesses and families are footing the bill,” Consumer Technology Association President Gary Shapiro said Sept. 11, urging Congress to “intervene” in the U.S.-China trade war. With fewer than 40 legislative days left this year, the House and Senate should hold hearings on S. 899 and H.R. 3477, Shapiro said. The bills would raise congressional oversight of the Trump administration’s Section 301 tariff actions, but have gone nowhere since being introduced months ago (see 1906250029). The legislation would “protect Americans from this seemingly endless trade war,” Shapiro said. “Congress has the power to review and should use its limited time left to investigate the scope and intent of the president’s misguided trade policy.”
President Donald Trump said the next Section 301 tariff increase won't occur until Oct. 15, two weeks later than the previously announced date. "We have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th," he said in a tweet.