US Tariff Exclusion for Chinese Imports

19/03/2020    304
  • Since June 2019, the USTR has initiated a tariff exclusion process for Chinese products subject to additional tariffs under the US-China trade war – US$34 billion (List 1), US$16 billion (List 2), US$200 billion (List 3), and US$120 billion (List 4A) trade actions.
  • So far, a total of 24 exemption lists have been published by the USTR to benefit Chinese imports.
  • While the exemption rates for List 1 and 2 are over 35 percent, the exemption rate for List 3, which covers more consumer and assembled goods, is only 3 percent.
  • On March 6, 2020, the latest batch of exemption for List 4 was released. It exempted over 100 Chinese-made medical items from US additional tariffs, including face masks, surgical gowns, and other medical gear, as COVID-19 has been increasing demand in the US.

While the US has imposed additional tariffs on Chinese imports in the course of the US-China trade war, beneath the headlines, the Office of the US Trade Representative (USTR) has put in place a tariff exclusion process to exempt certain Chinese imports from additional tariffs.

Chinese goods in either one of the following four Section 301 lists are allowed to apply for tariff exemption through the USTR.

  • List 1 – US$34 billion worth of Chinese products, effective from July 6, 2018;
  • List 2 – US$16 billion worth of Chinese products, effective from August 23, 2018;
  • List 3 – US$200 billion worth of Chinese products, effective from September 24, 2018;
  • List 4A – US$120 billion worth of Chinese products, effective from September 1, 2019. (List 4, including List 4A and 4B, originally covered US$300 billion worth of Chinese products, scheduled to be effective from September 1, 2019 and December 15, 2019. However, after the US and China signed their Phase One Trade Agreement on January 15, 2020, the tariffs scheduled to take effect from December 15 were canceled)

The tariff exclusion process for products on the list 4A was closed on January 31, 2020. With it, the exclusion process for products on all four lists have been completed and a total of 24 batches of exemptions have been granted.


Exemption on Chinese-made medical supplies

On March 6, 2020, one month after the January 31 application deadline, the USTR approved the first batch of tariff exemption for products on the List 4A, which includes hundreds of medical items (you may find the enumerated statistical reporting numbers of the granted products here).

According to a report by the Wall Street Journal, exclusions are approved for 27 companies, which all filed the application before January 31.

The exempted products include more than 100 medical items – such as face masks, medical gowns, medical drapes, hand sanitizing wipes, examination gloves, medicine cups, stethoscope, and other medical gear – as the demand for the products continues to soars amid the COVID-19 crisis in the US.

Recipients of the exemptions include VistaLab Technologies Inc., Cardinal Health, and and Medline Industries Inc. Among them, Medline received 30 of the 103 exclusions granted.

What products have been granted exclusions so far?

According to the Wall Street Journal, the USTR has processed more than 52,000 tariff-exclusion requests, with decision pending on more than 12,000 requests.

The USTR has granted 35 percent of requests under the first two tranches of Chinese products (List 1 and 2); however, it denied most tariff-exclusion requests under the third tranche (List 3), which consists of more consumer and assembled goods.

The exemption rate for Chinese imports subject to the US$200 billion action (List 3) is just 3 percent, even though more than 2,500 US companies were seeking tariff exemptions on about 31,000 products under this action.

For denial of tariff exemption requests, the USTR did not give a comment on the reason. President Trump’s White House administration has defended the tariffs, saying it will pressure China to change practices unfair to US businesses and hoping this encourages US businesses to source products domestically.


24 batches of product exclusion granted

So far, 24 exclusion lists have been released on the USTR website.

For List 1 (US$34 billion trade action) – ten batches of exclusions have been granted:

  • Exclusions Granted December 28, 2018 (Federal Register: 83 FR 67463);
  • Exclusions Granted March 25, 2019 (Federal Register: 84 FR 11152);
  • Exclusions Granted April 18, 2019 (Federal Register: 84 FR 16310);
  • Exclusions Granted May 14, 2019 ( Federal Register: 84 FR 21389);
  • Exclusions Granted June 4, 2019 (Federal Register: 84 FR 25895);
  • Exclusions Granted July 9, 2019 (Federal Register: 84 FR 32821);
  • Exclusions Granted September 20, 2019 (Federal Register: 84 FR 49564);
  • Exclusions Granted October 2, 2019 (Federal Register: 84 FR 52567);
  • Exclusions Granted December 17, 2019 (Federal Register: 84 FR 69016) (The 84 FR 69016 also includes amendments to exclusions granted July 9, 2019 and September 20, 2019); and
  • Exclusions Granted February 11, 2020 (Federal Register: 85 FR 7816)

For List 2 (US$16 billion trade action) – four batches of exclusions have been granted:

  • Exclusions Granted July 31, 2019 (Federal Register: 84 FR 37381);
  • Exclusions Granted September 20, 2019 (Federal Register: 84 FR 49600);
  • Exclusions Granted October 2, 2019 (Federal Register: 84 FR 52553);
  • Amendments to Exclusions Granted September 20, 2019 (Federal Register: 84 FR 69011); and
  • Exclusions Granted February 20, 2020.

For List 3 (US$200 billion trade action) – nine batches of exclusions have been granted:

  • Exclusions Granted August 7, 2019 (Federal Register: 84 FR 38717);
  • Exclusions Granted September 20, 2019 (Federal Register: 84 FR 49591);
  • Exclusions Granted October 28, 2019;
  • Exclusions Granted November 13, 2019 (Federal Register: 84 FR 61674);
  • Exclusions Granted November 29, 2019 (Federal Register: 84 FR 65882);
  • Exclusions Granted December 17, 2019 (Federal Register: 84 FR 69012);
  • Exclusions Granted January 6, 2020 (Federal Register: 85 FR 549);
  • Exclusions Granted February 5, 2020 (Federal Register: 85 FR 6674); and
  • Exclusions Granted February 20, 2020 (Federal Register: 85 FR 9921).

For List 4A (US$120 billion trade action) – one batch of exclusion have been granted:

Archived: Application process for tariff exclusion

Previously, four rounds of application process had been completed. Interested persons in the US, including third parties (such as law firms, trade associations, and customs brokers) could submit requests for exemption from additional duties at the USTR website Businesses would be asked to identify a specific product, the supporting data, and the rationale for the requested exclusion.

The USTR evaluates the exclusion application case-by-case and regularly updates the status of each pending request on the Exclusions Portal at (You may search here for the status of your tariff-exclusion request).

The US government considers the following when processing tariff exemption requests:

  • Whether the particular product is available only from China, and whether the company made any efforts to source the product from non-Chinese suppliers.
  • Whether the imposition of additional duties (since September 2018) on the particular product has or will cause severe economic harm to the requester or other US interests.
  • Whether the particular product is strategically important or related to ‘‘Made in China 2025’’ or other Chinese industrial programs.

In addressing each factor, the requester needed to provide support for their assertions.

Any tariff exemption on the product(s), if granted, would be valid for one year starting the effective date for the additional duties.

Compared with China’s own exemption procedures, the US tariff exclusion process additionally involves seeking opinions from other relevant interested parties.

The USTR also requires a more detailed description of the particular product, including its physical characteristics, function, application, principal use, and any other unique physical features that distinguish it from other products.

Source: China Briefing