The Trump Administration has imposed tariffs on nearly $5 billion of US imports of medical products from China, which accounts for roughly 26 percent of all medical products imported from all countries. Facing potential supply shortages, the Administration published an announcement in the Federal Register on March 16, 2020, that it would exclude several Harmonized Tariff Schedule categories from the Section 301 duties to aid in the treatment of COVID-19. These exclusions cover products like certain types of disposable gloves and biohazard bags, and the exclusions will apply from September 24, 2018 through August 7, 2020. This comes at the same time as a related announcement that temporarily reduces these tariffs on other medical products and equipment from China, such as facemasks, gauze, latex gloves, and sanitizing wipes. These tariff exclusions or reductions are important and valuable, and importers of medical goods should ensure that they review the available exclusions and properly claim them, where available. Where the exclusions apply retroactively, importers should review their entries since September 2018 and prepare documentation to claim back duties paid or otherwise owed.
Section 301 duties changed US purchases of medical products
The data confirm that there has been a reduction in the import of numerous medical devices or medical products from China. Recent analysis by Chad Bown from the Peterson Institute of International Economics presented the data as follows:
Source: Chad P. Bown, Trump's trade policy is hampering the US fight against COVID-19, Peterson Institute for International Economics (March 13, 2020), https://www.piie.com/blogs/trade-and-investment-policy-watch/trumps-trade-policy-hampering-us-fight-against-covid-19 (last accessed on March 16, 2020).
These imports trends began after President Trump imposed Section 301 tariffs on Chinese products in early 2018. Duties were imposed on various medical products as part of the fourth round of tariffs in September 2019. Numerous healthcare industry group experts testified before the US Trade Representative about the impact of these duties. In February 2019, the tariff rate on some medical products was reduced from 15% to 7.5% as part of the Phase 1 U.S.-China trade agreement. On March 10, 2020 and March 16, 2020, the administration issued temporary tariff exclusions on additional medical products with other exclusion requests still pending.
Importantly, if you have imports that fall within in the scope of these exclusions, you should ensure that you file Post Summary Corrections or protests with US Customs and Border Protection and claim back any duties that have been paid and/or rely on the exclusions going forward.
Further, be vigilant in monitoring developments from the US Trade Representative in reacting to additional exclusion requests that are pending. When exclusions are granted, they are generally product-specific - not importer or purchaser specific. That means that any US importer can claim the exclusion if its import meets the language provided in the tariff exclusion annex that is published by the US Trade Representative.
Where you have questions about the scope or availability of exclusions or how to claim the exclusion with US Customs, please contact the authors or the Baker McKenzie attorney with whom you work.