COVID-19: USTR Taking Steps to Modify Section 301 Tariffs in Response to Coronavirus Crisis

On March 20, 2020, the Office of the United States Trade Representative (USTR) announced that it was opening a docket to consider additional modifications to tariffs being imposed on China-origin medical-care products pursuant to Section 301 of the Trade Act of 1974. USTR is taking this step “in an effort to keep current on developments in our national fight against the coronavirus pandemic.” This new procedure is in addition to the ongoing product-specific exclusion processes that USTR is conducting on the so-called Section 301 Lists 3 and 4.

According to a Notice scheduled to appear in the Federal Register on March 25, this procedure will provide an opportunity for interested parties to request exclusions for any medical-care products that could be used in COVID-19 response efforts, regardless of whether the particular product in question is subject to a pending or denied exclusion request. The docket will remain open until June 25, 2020, and USTR may extend this deadline as appropriate.

The Notice encourages interested parties to submit comments as promptly as possible to facilitate timely consideration. USTR will also permit interested parties to submit responses to comments. Responding parties should file their comments within three business days after the original comment is posted on the docket to be assured of consideration. USTR intends to review all comments on a rolling basis.

Comments should describe the product in question as precisely as possible, and include information on the product’s functionality and physical characteristics (e.g., dimensions, material composition or other characteristics). Comments should also identify the 10-digit U.S. Harmonized Tariff Schedule (HTSUS) subheading applicable to the product. USTR will also accept information concerning the producer of the product, its importer, the ultimate consumer(s), or trademarks or tradenames, although it has described this information as “less helpful.”

This new initiative is in addition to previous steps USTR has taken to exempt personal protective equipment products and other medical-care related products from Section 301 tariffs. Specifically:

  • On March 10, 2020, USTR announced that it would exclude from tariffs certain categories of medical-care products on Section 301 List 4. The excluded products included soap, labware; medical gloves, antibacterial wipes, disposable hospital gowns and surgical drapes. The tariff exclusions are retroactive to September 1, 2019, and will apply until September 1, 2020.
  • On March 16, 2020, USTR announced that it would exclude disposable plastic gloves classified under subheading 4015.19.1010 from Section 301 List 3. The tariff exclusion is retroactive to September 24, 2018, and will apply until August 7, 2020.
  • On March 17, 2020, USTR announced that it would exclude additional medical-care products from Section 301 List 4, including single-use face masks and medical masks, cotton sponges, disposable pill-dispensing cups, molded plastic surgical bowls, gel pads, single-use sterile drapes and disposable shoe covers, single-use hot and cold packs, patient blood pressure cuffs, foam plastic pads used for positioning patients during medical procedures and stethoscope covers. The tariff exclusions are retroactive to September 1, 2019, and will apply until September 1, 2020.

Although USTR is taking this additional step to suspend certain Section 301 tariffs, both USTR and President Trump have rejected calls to suspend all Section 301 tariffs as a general matter. Further, USTR has already come under some criticism for the limited scope of this new process. For example, in a March 24 letter to USTR Lighthizer and Commerce Secretary Wilbur Ross, Congressional Representatives Ron Kind (D-WI), Suzan DelBene (D-WA) and Terri Sewell (D-AL) described the docket as an “initial step” but “not enough to stop the harm that is being done to our health care system and economy.”

In light of the intense focus on the coronavirus pandemic in Congress, companies wishing to submit requests to the new USTR docket should consider seeking congressional support for their applications.

WilmerHale has assisted numerous clients in seeking exemptions from the China Section 301 tariffs, and we continue to monitor these developments closely. WilmerHale has also assembled a task force of legal authorities across the wide array of disciplines implicated by the outbreak of COVID-19 that stands ready to assist clients as they develop legal and operational plans and protocols.