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07 February 2020
On 15 January 2020 President Trump and Chinese Vice Premier Liu Hu signed the long-awaited US-China Trade Agreement after nearly two years of a trade war that has resulted in crippling tariffs on almost $500 billion worth of bilateral trade.
This preliminary agreement requests China to purchase approximately $200 billion in US agricultural, energy and manufactured goods and services over the next two years and provide better protection to US intellectual property and trade secrets. In exchange, Trump has agreed to reduce the List 4A tariffs on $120 billion worth of goods from 15% to 7.5% within 30 days and indefinitely suspend the imposition of a 15% tariff on List 4B products. This momentary truce does not reference the remaining tariffs on $360 billion of products, but Trump has left open the possibility of tariff reductions and removal if future negotiations are successful. As of 23 January 2020, the existing tariffs remained.
The reduction in tariffs on List 4A products to 7.5% will take effect on 14 February 2020. According to the Federal Register notice, the reduced duty rate will be "[e]ffective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 am Eastern Standard Time on February 14, 2020". Unfortunately for importers of products subject to List 4A, the rate reduction is not retroactive from the effective date of 1 September 2019.
US Customs and Border Protection (CBP) will apply the duty reduction according to what it determines to be the date and time of entry (ie, when goods are 'entered'). Importers have some ability to request the date of entry, as explained below.
The customs regulations (specifically 19 CFR § 141.68) provide that when an entry summary is filed (Customs Form 7501) and serves as both the entry documentation and entry summary, the time of entry is controlled by the filing of the entry summary. For example, if an entry/entry summary is filed on 13 February 2020, that is the date of entry for tariff purposes.
However, when the entry data elements (ie, the CF 3461 documentation in the previous 'paper world') are filed without the entry summary information (as is usually the case), the importer can elect the time of entry pursuant to Section 141.68(a). In the Automated Broker Interface, there is a field called 'Entry Date Election Code'. If the filer places an 'A' in that field, the time of entry is the estimated date of arrival. If the filer places a 'P' in the election field, the time of entry is the presentation date. If the election field is left blank, the time of entry is when CBP authorises the release of the merchandise or any part of the merchandise covered by the entry documentation pursuant to Section 141.68(a)(1). By leaving the field blank, CBP assumes that the filer is not requesting a time of entry other than the release date. Cargo release of merchandise by CBP varies by the mode of transport (ie, truck, air or vessel) and can take hours or days for ocean cargo at busy ports of entry.
Accordingly, importers should ensure that their brokers are using the correct procedures to request a date and time of entry that will be no earlier than 14 February 2020, where possible, for products covered by List 4A.
Alternatively, importers could move imported merchandise into a bonded warehouse until 14 February 2020. Goods withdrawn for consumption from the bonded warehouse on or after 14 February 2020 would be subject to the reduced 7.5% duty rate.
Other types of entry may have different dates of entry.
For further information on this topic please contact Kay C Georgi, Teresa Polino or David Salkeld at Arent Fox LLP's Washington DC office by telephone (+1 202 857 6000) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). Alternatively, contact Elyssa R (Emsellem) Kutner at Arent Fox LLP's New York office by telephone (+1 202 857 6000) or email (email@example.com). The Arent Fox LLP website can be accessed at www.arentfox.com.
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