Despite concerns that tariffs on Mexico, Canada, and China would take effect on February 4, additional tariffs for Canada and Mexico have been delayed until at least March 1.
In the meantime, the Federal Register notice for China, as well as the Cargo Systems Messaging Service (CSMS) directives from Customs and Border Protection (CBP), have been issued.
A revised Executive Order for Canada and Mexico will likely be issued, confirming the new effective date of March 1.
Regarding China, here’s what you need to know:
- The 10% tariff applies to “products of China and Hong Kong,” the special tariff will be classified under HTSUS 9903.01.20.
- Definition of “products of China” now includes those from Hong Kong. The origin of goods is determined by substantial transformation.
- The tariffs are cumulative: In addition to the standard tariff rate, the Section 301 additional duty, and any applicable antidumping or countervailing duties (ADD/CVD), the 10% tariff will be added.
For instance, a product facing an 8% standard duty, 7.5% Section 301 duty, and 100% ADD will now incur a total duty of 125.5%.
Section 301 Exclusions & MTB Duty Suspensions/Reductions:
- Goods that were exempted from Section 301 tariffs still incur the additional 10% tariff.
- Items eligible for duty exemption or reduction under HTSUS Heading 9902 (e.g., Miscellaneous Trade Bill) are also subject to this tariff.
Section 321 Exclusion for China/Hong Kong Goods:
- Section 321 (de minimis), which allows for duty-free imports under $800, is restricted for “products of China and Hong Kong.”
These goods cannot enter the U.S. as de minimis. They must undergo formal or informal entry processes. - Goods entering the U.S. via international mail will require a formal entry.
No Drawback for These Tariffs:
- Drawback is not permitted for the additional 10% tariff. However, duty drawback is allowed for other eligible duties.
Exemptions from the Additional 10% Tariff:
The following products will not be subject to the 10% tariff:
- Goods for personal use.
- Goods under Chapter 98 HTSUS, including:
- 9802.00.40 or 9802.00.50 (repairs/alterations) – Tariffs apply on value added in China and Hong Kong.
- 9802.00.60 (metal articles processed abroad) – Tariffs apply on value added in China and Hong Kong.
- 9802.00.80 (assembly of U.S. components) – Tariffs apply on value added in China and Hong Kong.
- 9801 (goods exported from the U.S. and returned from China/Hong Kong) – Not subject to tariff, even if originating from China/Hong Kong.
- Donations of food, clothing, and medicine to relieve human suffering (exempt with HTSUS 9903.01.21).
- Merely informational materials (exempt with HTSUS 9903.01.22).
Exemption for Goods in Transit Until March 7:
- Goods loaded on a vessel or in transit on the final mode of transport before 12:01 a.m. Eastern Time (ET) on February 1, 2025, will not be subject to the 10% tariff, even if entered or withdrawn from warehouse after February 4. This exemption is valid until 12:01 a.m. ET on March 7. Entries made after that date will require the payment of duties.
- Exemption claim code: HTSUS 9903.01.23.
FTZ Goods:
- Products of China and Hong Kong admitted to a Foreign Trade Zone (FTZ) after 12:01 ET on February 4 must be in privileged foreign status. When entered into U.S. consumption, they will be subject to the tariff in effect at the time of FTZ admission, including the 10% tariff.
- Goods eligible for admission to an FTZ under domestic status are exempt from the tariff.
Source: NCBFAA Legislative Advisor Nicole Bivens Collinson of Sandler, Travis & Rosenberg, P.A.