Additional 301 tariffs start September 1st

The U.S. puts in place the latest tariff increase – here’s what you need to know…

As announced on August 30th, 2019 in a Notice of Modification of Action from the Office of the United States Trade Representatives, additional 301 tariffs are now in place. For products covered by Annex A of the August 20, 2019 Federal Register notice, the rate of additional duty will be 15 percent on the current effective date of September 1, 2019. For products covered by Annex C of the August 20 notice, the rate of additional duty will be 15 percent on the current effective date of December 15, 2019.

For questions about this action, contact Associate General Counsel Arthur Tsao, Assistant General Counsel Megan Grimball, or Director of Industrial Goods Justin Hoffmann at (202) 395–5725. For questions on Customs classification or implementation of additional duties on products identified in the Annexes to this notice, email Customs at traderemedy@cbp.dhs.gov.  

See the list of HTS numbers covered by the Sept 1st increase here.

FY2020 CBP increases MPF min and max amount

According to CBP, due to inflation the minimum and maximum amount for MPF (Merchandise Processing Fee) for CBP fiscal year 2020 will change starting October 1st.

The MPF ad valorem rate of 0.3464% will not change, however the minimum and maximum amounts on formal entries will change as follows:

  • MPF minimum as of Oct 1st will increase from $26.22 to $26.79
  • MPF maximum as of Oct 1st will increase from $508.70 to $519.76

A complete list of CBP fees for FY2020 can be found in the Federal Register Notice here.

US to delay some tariff increases

On August 13, 2019, it was announced that the US is delaying imposing tariffs on over $300 billion dollars of imports from China until Dec 15th because of “health, safety, national security and other factors” according to The Washington Post and other news sources.

The products include mobile phones, laptops, video game consoles, some toys, computer monitors, and certain footwear and clothing.  The Trump administration say’s this delay was in part to avoid hitting US shoppers this Christmas.

The USTR released additional information and has split the list of goods into  List 4A: https://ustr.gov/sites/default/files/enforcement/301Investigations/List_4A_%28Effective_September_1%2C_2019%29.pdf

and list 4B: https://ustr.gov/sites/default/files/enforcement/301Investigations/List_4B_%28Effective_December_15%2C_2019%29.pdf

Mr. Trump hinted that he was expecting something in return, suggesting that China’s failure to “buy big” from the US farmers could be about to change.

It would be beneficial to review the items on both lists to determine if any of your products will be subject to the tariffs and what the effective date will be.

For more information on this issue click here: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/august/ustr-announces-next-steps-proposed

Acting CBP Commissioner resigns

Today, American Shipper published in their Daily Digital Magazine, the news that acting CBP Commissioner, John Sanders, is resigning effective July 5th, 2019.

Acting Commissioner Sanders was in his role for 2 1/2 months. According to various news reports, President Donald Trump is expected to name Mark Morgan, a former FBI analyst who currently serves as acting director of Immigration and Customs Enforcement, as the new acting CBP commissioner.

How are companies are softening the Trump tariff blows?

Facing the onslaught of President Trump’s China Tariffs, importers are having to get creative in order to minimize the impact these higher duty rates will have on their goods. 

Foreign Trade Zone / Bonded Warehouse / Tariff Engineering

Foreign Trade Zones (FTZ), approved by the U.S. government, can be a temporary haven for companies reducing duties on a case-by-case basis.  Trade zones are not a loophole for goods destined for the U.S. market, but they can be a way for companies to avoid duties on goods shipped to the United States and subsequently re-exported to another country.

There are different types of zone designations depending on the end use of the goods; further manufacturing, packaging, comingling, etc.  In any case, the duties are not paid out until the goods are exported out of the Trade Zone, either in-bond for re-export or destined for the U.S. market.  Companies can utilize the zones to spread out those duty payments based upon the timing of the export from the zones.  This can help manage huge import duty payments being paid at time of import to the U.S. 

Bonded warehouses are another option. Firms can store and make products in “Customs-bonded” warehouses for up to five years. Duties are only applied once products leave the facility for consumption. Companies can apply to U.S. Customs for a license to operate a bonded warehouse.

According to a paper by law firm Barnes, Richards & Colburn, Tariff engineering also is making a comeback.  Companies can tweak their design processes in order to be able the re-classify their goods under a lower duty rate.  However, importers need to be very conscious of taking this too far, since Customs tends to reject revisions to existing HTS codes when companies appear to be making a “fictional or temporary product”. 

To view the full article in Transport Topics (TTNews) “In Times of Trade War, Companies Get Creative to Avoid Tariffs”.

Changes to interest rate calculations for reconciliation

Changes published today in CBP Admin Message CSMS# 19-000310 Interest Rates for Reconciliation

Effective July 2019, CBP will no longer publish on CBP.gov the quarterly interest rates for Reconciliation. Filers can find the quarterly rates on the www.irs.gov website by querying “quarterly interest rates for (YYYY)” in the search engine located on the upper right hand corner of the webpage.

The Reconciliation section of the ACE Business Rules will be updated with the above website for identifying the quarterly rates.

If you have any questions or require additional information, please email OT-RECONFOLDER@CBP.DHS.GOV, Commercial Operations, Revenue and Entry Division, Office of Trade.

To which CEE do you belong?

U.S. Customs Centers of Excellence and Expertise, aka “CEEs” are Customs way to better align with modern business practices. Whether or not you are currently engaged with your CEE, Importers are already assigned to one.

Ever wonder how to find out which CEE team has been assigned to your company? 

Well, it’s not as difficult as you may have thought… In order to get the details, you just need to do a simple bond query with your company’s Federal Identification number, either though your surety, Customs broker, or in ABI/ACE directly . The query results will show you who your CEE team is.  Below is an example of how it looks in the ABI response.

It’s as simple as that! Contact CustomsNow if you have any questions.

CBP Trade Symposium announced – July 23rd-24th

CBP TRADE SYMPOSIUM IN CHICAGO – CBP sent out a formal notice that the Trade Symposium will be held in Chicago this year. The registration will open on Thursday, June 13th, at noon EST. Learn more here.

This is always a great event to get up-to-date information on current trade activities. The event sells out quickly so be sure to register early!

Processes for US Goods Returned

Goods that were manufactured in the United States (US) and returned to the US are eligible for free entry back into the country only if:

  • They have not undergone any advancement in value due to upgrades, repairs, improvements in condition or any other processing which would elevate the value of the item.  
  • If the goods were subjected to changes which improved the condition then you would be responsible for paying duty on the fair market value of the labor or the item as it has been changed.  Chapter 9802 would cover the repairs, changes value. 
  • **NOTE**, duty is only assessed on the actual repair or improvement not on the entire value of the goods. 

If the goods have not been subjected to any of the outlined processes above then you would file a CBP Form 3311, Declaration for Free Entry of American Goods Returned here.   This would entitle you to free entry under HTS 9801.00.10 as duty free.

GOODS FOR WHICH DUTY HAS ALREADY BEEN PAID RETURNING TO THE US

A common question which arises is “what if I have goods on which duty has already been paid returning to the US”, for example a product sold that is defective, damaged, doesn’t conform to a certain specification outlines by the buyer etc..  

Subheading 9801.00.26, HTS provides for articles, previously imported, with respect to which the duty was paid, if

  • They were exported within 3 years after the date of such previous importation.
  • Sold for exportation and exported to individuals for their personal use, re-imported for the reason hat such articles do not conform to sample or specifications
  • Re-imported without having been advance in value or improved in condition by any process of manufacture or other means while abroad.
  • Re-imported as personal returns from those individuals; and re-imported by and for the account of the person who exported the goods from the United States within one year of the exportation.

If all of these conditions are satisfied, the goods are eligible to be re-imported duty free.  Also, if the goods are imported under HTS 9801.00.26 they are not subject to visa or quota requirements as well.

However, if the goods were originally exported with the benefit of drawback, the goods will not be eligible for duty-free treatment upon re-import.  The reason being, U.S. Note 1(a), Subchapter I, Chapter98, HTS, states that subheading 9801.00.26 would not apply to an article exported with the benefit of drawback.

***NOTE*** CBP has the right to request proof from the exporting party that duty was paid upon the previous import of the items.   

“The New NAFTA” – informative article from SupplyChainBrain

nafta-main

Need a good introduction to “New NAFTA”?  An article written today by Robert J. Bowman, SupplyChainBrain, called “The New NAFTA: What Does It Mean For Supply Chains?”is a great place to start.

This Q&A covers topics associated with the new agreement and the potential impact to U.S. supply chains.

Specifics about the new deal, called the United States-Mexico-Canada Agreement, or USMCA, have been published on the Office of The United States Trade Representative website, found here.