Since June 20, 2018, the U.S. has taken multiple tariff actions against China under Section 301 of the Trade Act. In total, these tariffs affect products with a total annual trade value of $550 billion. In a previous alert, we mentioned that the United States Trade Representative (USTR) granted certain exclusions from a 25% tariffs on certain products (such as plastic bags/garbage bags, sanitary gloves, and other hygienic products) in order to lessen the burden on U.S. importers during this challenging time. Since those exclusions were announced, the USTR has quickly issued three more rounds of exclusions from various tariffs issued under the China Section 301 actions. In addition, in order to combat the COVID-19 pandemic, the USTR has also created a process by which interested parties can apply for an exclusion from any of these tariffs.
In its fourth and broadest round of Section 301 actions against China, the USTR instituted a 7.5% tariff on $300 billion worth of goods. On March 17 and March 31, the USTR granted a series of exclusions from this tariff. Along with seven non-medical product exclusions, the USTR has excluded numerous products from this 7.5% additional tariff. Broadly speaking, these products include:
- Coverings designed to fit over wound sites or casts for keeping the site dry;
- Pouches used with manually operated pill or tablet crushers;
- Refillable wall dispensers used to store and dispense emesis containment bags in medical settings;
- Sterile urology drain bags;
- Refillable, textile ice bags;
- Plastic bowls, with clips for retaining guide wires during surgical procedures;
- Disposable plastic graduated medicine dispensing cups;
- Foam plastic pads used for positioning patients during medical procedures;
- Single-use plastic sterile drapes and covers used to protect the sterile field in surgical operating rooms;
- Sterile plastic decanters used to transfer aseptic fluids or medication to and from sterile bags, vials or glass containers;
- Single-use, instant, endothermic chemical reaction cold packs combined with a textile exterior lining;
- Disposable fabric shoe and boot covers;
- Eye compresses, each consisting of a fabric cover filled with silica or gel beads;
- Single-use face masks;
- Textile gel pads, each with removable fabric sleeves;
- Single-use, textile endothermic chemical reaction hot packs;
- Cotton laparotomy sponges;
- Patient restraint or safety straps;
- Single-use blood pressure cuff sleeves;
- Single-use stethoscope covers;
- Woven gauze sponges; and,
- Electromechanical shoe cover dispensers.
In addition to these medical equipment exclusions, the USTR has also granted exclusions on 177 products from a 25% tariff on articles from China. This list of products includes items in a broad range of categories, including food, chemicals, vehicle parts, and circuit components.
COVID-19 Exclusion Application Process
In order to better develop a response to the pandemic, the USTR has created a procedure for any interested party to request that any product of China subject to a Section 301 tariff be excluded from the tariff. Notably, unlike prior exclusion processes, this process does not require an applicant to analyze how the particular product relates to China’s strategic trade plan and in what quantities the product is available domestically; this procedure simply requires an explanation of how the particular product relates to the COVID-19 response.
This process potentially covers far more products than it might initially appear. Not only are products clearly related to the treatment of COVID-19 covered (such as ventilators or anti-viral medications), but it also covers products that would help limit transmission of the disease, as well as products that are used to manufacture any of these items.
These requests should be submitted by June 25, 2020. However, the USTR has indicated that they will be reviewing requests on a rolling basis, so the earlier a request is submitted the faster it is likely to be processed. If a request is granted, it will be retroactive, applying from September 1, 2019, through September 1, 2020. A request may be made for an exclusion regardless of whether the particular product has been the subject of a previous, unsuccessful request.
The rapid announcement of these new exclusions, coupled with this new application process, indicates that the USTR is actively monitoring the pandemic situation and is likely to continue to make new determinations to assist U.S. importers in meeting these needs. If you import products that you believe would be helpful in the response to this pandemic and they are currently subject to one of the Section 301 actions against China, consider reaching out to one of our experienced attorneys for assistance in applying for an exclusion.