Winning China Tariff Exclusions for Consumer Goods Maker

When a major consumer goods company faced a multimillion-dollar impact from the U.S. trade war with China, it called on Holland & Knight's Public Policy & Regulation and International Trade Groups to seek Section 301 tariff exclusions. The governmental advocacy teams won a victory worth more than $4 million a year for the maker of household products.
Chinese American Cargo

When a major consumer goods company faced a multimillion-dollar impact from the U.S. trade tariffs on China, it called on the highly experienced attorneys and professionals of Holland & Knight's Public Policy & Regulation and International Trade Groups. The governmental affairs teams won a victory worth $4 million a year for the maker of the household devices, which are made in China and were subject to Section 301 tariffs on their importation to the United States.

Section 301 has been one of the Trump Administration's principal unilateral enforcement tools since its probe of China's technology policies last year, leading to tariffs having already been imposed on $250 billion worth of Chinese imports. Section 301 grants the Office of the U.S. Trade Representative (USTR) broad authority to make determinations and impose retaliatory measures regarding acts, policies and practices of foreign countries that violate or contradict rights of the United States under any existing trade agreement or are "unjustifiable" and "unreasonable" and burden or restrict U.S. Commerce (See 19 U.S.C. §2411).

The multinational maker of household and other products built specialized factories to manufacture the device, which can only be made in the Chinese plants. If the company was forced to pay the additional tariffs or build new factories outside of China, it would have been a major financial setback.

Holland & Knight's international and cross-border trade attorneys filed the request with the USTR for the device to be excluded from the Section 301 tariffs in December 2018. As the request worked its way through the regulatory hurdles, our public policy professionals went to work seeking congressional support from various caucuses, asking them to weigh in with the USTR. The first round of calls from the Senate helped the request pass through the first two stages of the review process, and our governmental professionals continued to provide financial outlooks and fiscal impact reports that convinced the Senate to make another round of calls.

The exclusion request was granted by the USTR and published on July 31 in the Federal Register. The company imports just under $20 million worth of the devices annually, which would have resulted in almost $5 million in tariffs each year. Not only will the company no longer face these additional fees, but it will receive a refund check from the U.S. Department of Homeland Security for the tariffs it had already paid. 

On August 13, 2019, the USTR announced the next steps in the process of imposing an additional tariff of 10 percent on approximately $300 billion of Chinese imports. The announcement also noted that "certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent." In addition, the USTR said it will conduct an exclusion process for products subject to the additional tariff.

Members of Holland & Knight's Public Policy & Regulation Practice Group and International Trade Group work collaboratively to provide comprehensive representation for our clients at every level of government, including managing complex client problems and opportunities involving trade agreements and local, state and federal government regulatory, transactional and legislative matters. Contact one of our PP&R professionals or International Trade Group attorneys to learn more about how we can help you navigate the Section 301 tariff process and other trade developments.

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