Tariffs under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 have been imposed on imports since as early as March 23, 2018. Exemptions from the tariffs are available, and importers should consider implementing strategies to maximize potential recovery of the duties they have paid.
Section 232 duties
Section 232 duties on importations of steel and aluminum products went into effect on subject products on March 23, 2018 or June 1, 2018, depending upon the country of origin. Several entities have filed lawsuits challenging the constitutionality of Section 232 or its application to certain steel articles. In the event one of these cases is successful, other importers might be able to recover refunds of Section 232 tariffs previously paid. If a company wishes to protect its interests in recovery of duties based on this constitutional challenge, at a minimum it will be necessary to file a civil action in the U.S. Court of International Trade within two years of the date that these payments were made. Duty refunds will likely not be automatic.
Aside from the constitutional challenge, companies importing or using imported steel or aluminum can request exclusions from the tariffs if the imported steel or aluminum article is (i) not produced in the United States in a sufficient and reasonably available amount, (ii) not produced in the U.S. to a satisfactory quality, or (iii) for specific national security considerations. Hundreds of companies have requested exclusions for their products. For many companies, the Commerce Department has either denied the requests, or not yet issued a decision. It is taking the Commerce Department on average 275 days to issue a decision on steel exclusion requests when one or more objections are filed.
If an exclusion is eventually granted but liquidation of the entry has become final, CBP will not be able to issue refunds. Companies seeking refunds of Section 232 duties on the basis of exclusion requests therefore need to carefully monitor the liquidation status of their entries and either obtain an extension of liquidation or file protests against liquidated entries. For companies that believe their exclusion requests were wrongly denied, there is the ability to challenge the denials through a civil action in the Court of International Trade (CIT). The court has authority under the Administrative Procedures Act to set aside Commerce Department exclusion decisions that are not supported by the evidence or that otherwise conflict with Commerce’s regulations defining the terms “reasonably available” or “satisfactory quality.” It is important that companies filing in court also ensure that liquidation of their entries is extended, or that protests are filed against the liquidation of all affected entries.
If your company has questions or concerns about the exclusion process, the filing of protests, and the possibility of challenging an improper denial of an exclusion request, please feel free to contact our offices.
Section 301 duties
Section 301 duties of up to 25% ad valorem have been imposed on certain products of China in three groups or “tranches.” Duties went into effect on July 6, 2018, August 23, 2018 and September 24, 2018. The U.S, Trade Representative (USTR) has been authorized to exclude products from assessment of the duties. To date the USTR has approved six groups of product exclusions from tranche 1, and one group of product exclusions from tranche 2. The USTR is still reviewing product exclusion requests for goods in tranche 1 and 2, and is currently accepting new requests for exclusion of goods in tranche 3, which can be filed up through September 30, 2019. If an exclusion is granted, duties will be refunded retroactively to the respective effective dates set forth above, provided that liquidation of the entry has not become final. Importantly, exclusions are valid for all importers of the covered product, not just the company that requested the exclusion.
Given the length of time it has taken the USTR to act upon exclusion requests, it is important for importers to monitor the liquidation status of their entries and either obtain an extension of liquidation (which also keeps all other issues open on those entries), or file a protest if the entry has liquidated.
Against this background, it is recommend that importers do one or more of the following: (1) review pending exclusion requests to identify any that might cover a product that they have imported; (2) identify customs entries relating to the importation of the covered items; (3) submit a request to US Customs to extend liquidation of those entries if not yet liquidated, (4) monitor the liquidation status of any entries which include covered products; and (5) ensure that protests are timely filed if any entries are liquidated without a refund of the additional duties.
Please feel free to contact one of our attorneys if your company would like assistance in preparing and submitting exclusion requests for Tranche 3 products, or implementing a procedure to maximize potential recovery of Section 301 duties in the event additional exclusion requests are granted.