WASHINGTON — Automakers and other U.S.-based companies that depend on intermediate goods from China caught a break this week when President Donald Trump postponed a March 1 deadline for raising tariffs on $200 billion worth of Chinese products to 25 percent from 10 percent.
But the importers may also benefit from a less-noticed provision buried in a massive piece of legislation enacted this month.
In an explanatory statement accompanying the omnibus appropriations legislation signed into law Feb. 15, which averted a second government shutdown, Congress directed the U.S. Trade Representative's office to establish an exclusion process for the third batch of goods hit with U.S. tariffs on imports from China. Many companies say certain products they need are available only from China and shouldn't be subject to the punitive duties.
The process for requesting product-specific exemptions from tariffs is supposed to be similar to those for the first and second list of products. The USTR must report on the implementation and timing of the process by March 17.
Products affected by the 10 percent tariffs include finished vehicle parts, as well tools and materials, such as metal oxides and chemicals, used by parts manufacturers to make finished components.
The USTR never created an exclusion process for List 3 Chinese goods, as it did with the first two tariff rounds on $50 billion worth of Chinese imports because it said ongoing negotiations with China might result in a resolution of the trade dispute. If the duty rate is ultimately increased to 25 percent, an exclusion process will be initiated, the USTR said in a Jan. 11 letter to Sen. Tim Kaine, D-Va.
The letter also said the that users of Foreign Trade Zones, used by companies to defer or avoid payment of duties and taxes, will not be exempted from the China tariffs.
Trump initiated the Chinese tariffs under a Section 301 investigation that determined China was unfairly acquiring technology and subsidizing advanced manufacturing sectors. The 10 percent duties will remain in place indefinitely since the administration has not set a new timetable for concluding trade talks.
In December, the USTR granted almost 1,000 requests to exclude certain products from the $34 billion first round of tariffs. Companies that win exemptions can apply through U.S. Customs for duty refunds retroactive to July 6, 2018. No decisions have been made on the second-round exemptions.
