The Coronavirus Exception

Medical equipment from China gets tariff relief while most other requests are denied

Even amidst the COVID-19 pandemic, the United States continues to process product exclusion requests for U.S. businesses seeking relief from the Trump administration’s Section 301 tariffs on imports from China. The Office of the U.S. Trade Representative (USTR) continues to reject most of these requests, although there is evidence that they are making an exception for medical supplies. 

Since 2018, over 50,000 of tariff exclusion requests have been filed (a total of 52,747, as of June 8, 2020) by U.S. businesses. Recent requests include fire alarm system speakers, beach balls, and color laser printers.  

President Trump has used his authority under Section 301(B) of the Trade Act of 1974 (commonly called “Section 301”) to authorize tariffs on approximately $375 billion of US imports from China. But because US businesses can be adversely affected by these tariffs—for example, when a manufacturer needs a specific part from China to make its own products here in the United States—businesses can request that the Office of the United States Trade Representative (USTR) exclude qualified products from the tariffs.

We regularly track tariff exclusion requests, and in this update we include data on tranches 3 and 4A as of June 8, 2020. The vast majority of tranche 4A requests remain pending. Of the 8781 product exclusion requests filed in this fourth tranche, 8,614 (98.1 percent) await a decision. At the same time, all 167 of the requests that have been processed have been approved. Most of the approved requests (110 out of the 167) are for medical equipment such as medical ID wristbands, cooling gel pads, and pill crushers. The remaining 57 approvals include the Apple Watch, flat panel TVs, a host of bicycle helmets and lights, and, fortunately for all of America’s new pet owners, puppy pads. 

All of this comes as tariffs are taking an ever-greater toll on bilateral Sino-American trade. Data from January to April this year shows US imports from China down 25 percent compared to the same period last year, while duties collected on imports from China are up 17 percent. In addition, the overall applied rate on US imports from China (duties collected on U.S. imports from China divided by the customs value of U.S. imports from China) reached 11.7 percent, compared to 7.5 percent for this time last year, and 2.7 percent for the year in 2017. 

Meanwhile, on January 15, 2020, the USTR reported that the United States and China signed an agreement that requires structural reforms and “other changes to China’s economic and trade regime.” In exchange, the United States suspended some tariff increases that had been in Tranche 4B and rolled back others in Tranche 4A.