International, Tariffs

2021 Consolidated Appropriations Act: Jan. 1 Will Impact Many Importers

Point To Point

As details of the 2021 Consolidated Appropriations Act are coming out, there are several changes that will affect many, if not most, importers. First, most of the tariff exclusions for the China 301 duty actions that have been in place for well over a year now will not renew, and will expire on Dec. 31. Beginning January 1, importers of these goods will have to once again start paying the required duties of 25% under Lists 1-3 or 7.5% under List 4A in addition to any "normal" duty rates for goods made in China. While there is no indication that in the near term either Congress or the incoming Biden administration will take any action to renew or extend these exclusions retroactively, some exceptions have been made in the areas of medical devices and PPE items. A link to the Federal Register notice with all of the pertinent details can be found HERE.

Secondly, also effective January 1, the GSP duty preference program benefiting goods produced in developing countries will expire, and whereas the GSP program allowed duty-free entry into the US, these goods will now carry their "normal" rate of duty going forward. To put this in context, it should be noted that the GSP program has "lapsed" several times over the past 20 years. In each case, the program was ultimately renewed retroactively, and the duties paid were refunded to the listed importer of record on the entry. While there is no guarantee this will happen again, there is no partisan opposition to renewal, and there is no reason to believe it will not happen at some point in 2021. Until such a retroactive renewal takes place, however, importers will have to pay the duties. As your Customs broker, Averitt will notate each GSP-eligible entry with Customs such that the entry will benefit from any such renewal and refunds will automatically be processed by Customs once an appropriate bill is passed. 

A potential legislative solution for either of the above situations (especially for the GSP program) is normally part of the Miscellaneous Tariff Bill (MTB) passed each year. Unfortunately, the retroactive provisions discussed above are currently NOT part of the bill before Congress now. Interested importers need to communicate with their elected Representative and Senators to see that this element is added to the current bill. Regardless, the MTB is not expected to pass Congress before the end of 1Q, and likely well into the 2Q of 2021, so the additional costs will be borne by the importer at least until such time it is passed. If not included in the MTB, the timeframe for passage would likely move into the summer or fall of 2021.
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