One instance in which tariffs were reduced based on a slight product distinction may be found in a 2003 Court of International Trade case, Vaysfeld noted. That case found that X-Men action figures should be classified as non-doll toys (HTS Code 9503.49.00 with a 6.8 percent tariff) rather than dolls representing human beings (HTS Code 9502.10.40 with a 12 percent tariff).
Section 301 tariffs don’t apply to either product.
Baker & McKenzie customs lawyer Ted Murphy noted in a blog post that, based on the explanatory statement, USTR is clearly expected to establish a List 3 exclusion process.
But USTR might interpret the instructions to mean that such an exclusion process must be implemented only if tariffs rise from 10 percent to 25 percent, as the instructions state that the process should follow the “same procedures” as Rounds 1 and 2, and that the process applies to products under “new Round 3 tariffs,” Murphy wrote.
USTR has implemented exclusion processes for tariff lists 1 and 2, which includes 25 percent tariffs covering a combined $50 billion worth of goods from China.
As the tariffs continue, it’s also worth it for companies to review their bills of materials to examine where the components come from and where manufacturing takes place, in case it’s possible to “change slightly to get a different country of origin,” Vaysfeld said.
Another way for importers to potentially mitigate the impact of Section 301 tariffs is to use FTZs, which include benefits such as duty deferral, weekly entry and duty elimination on exports, which eliminates the need to file drawback, Vaysfeld said.
“So while the 25 percent duty is not generally eliminated, at least you can have the cash flow for that period of time, while it’s in the zone,” she said.
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