Trade and Tariffs DURING COVID-19

Despite a strong push from 160 retailers, manufacturers and other business groups, as well as some lawmakers, President Trump is not willing to rescind the currently imposed tariffs under Section 232 or Section 301 in order to provide businesses some certainty as they attempt to mitigate the impact of COVID- 19. However, in mid-March the Office of the United States Trade Representative (USTR) issued some product exclusions for medical and healthcare products from China that are currently subject to Section 301 tariffs. Some products from List 3 (25% tariffs on $200 billion worth of trade, first applied September 24, 2018) were excluded, and two separate lists of product exclusions were issued for List 4A (7.5% tariffs on certain products covering $300 billion worth of trade, first applied September 1, 2019). Industry associations including the American Apparel and Footwear Association (AAFA) and the National Association for Manufacturers (NAM) are pledging to members that they will continue to advocate for this action in hopes of providing businesses as much relief as possible. Finally, USTR is also seeking comments on the removal of Section 301 tariffs on any other imported products believed could be used to respond to the pandemic.

Customs and Border Protection (CBP) is also currently permitting importers to defer duty payments on a case-by-case basis for up to ten days, as stated in CSMS #42097586. This action allows companies to maintain a better cash flow. CBP is sympathetic to the impact the COVID-19 virus is having on importers, however, CBP does not have the authority to extend the proposed current 10-day relief. Experts believe that a presidential proclamation directing the U.S. Treasury Department to allow importers a longer period of relief is required. This action is expected sometime in the coming days, and it will provide companies some additional, but likely temporary, relief.

Finally, many companies have expressed concern that the production and shipping delays caused by the virus will lead to the inability to sell seasonal products. Many are asking CBP to take this into consideration when calculating the duties on the imported product. Unfortunately, CBP is required by law to calculate the duties owed based on the entry value of the goods and cannot take retail prices or unsold inventory into account. Thus, companies are being encouraged to either work to renegotiate the prices of the goods prior to shipment, or to at least designate the value on the entry paperwork as the value of the goods at the time of export.