Leibowitz on Trade: Status Report on Section 301

Early in the week, President Trump moved the deadline for agreement between the U.S. and China closer. Instead of 90 days from Jan. 1 (March 31), the president announced that the deadline was 90 days from Dec. 2, or March 1, 2019. U.S. Trade Representative Robert Lighthizer yesterday stated his view that this was a “hard” deadline—no extensions of the negotiations, at least as far as he was concerned. Markets continue to be roiled over the news of a possible escalation of U.S.-China trade tensions.

As the tariffs continue, there were a few reports on the product exclusion process for the “Section 301” tariffs, which apply only to goods originating in China (that is not quite accurate, but close enough for present discussions). I took the opportunity to examine the latest USTR score sheet on tariff exclusions under Section 301. These are NOT to be confused with the steel and aluminum tariffs:

Tariff Group 1—These tariffs (25 percent on $34 billion of 2017) went into effect on July 6, 2018. Exclusion requests were due to be filed by Oct. 9.

The latest numbers from USTR on the status of exclusion requests:

• Total number of requests filed: 10,767
• Requests denied as of Dec. 7: 1,487
• Requests subject to public comment: 73
• Requests under substantive review: 8,572
• Requests referred to Customs and Border Protection for administrative feasibility: 635
• Requests approved: 0

Tariff Group 2—These tariffs (25 percent on $16 billion of 2017 trade value) went into effect on Aug. 23, 2018. Exclusion requests are due to be filed by Dec. 18. The latest numbers:

• Total number of requests filed as of Dec. 7: 908
• Requests denied as of Dec. 7: 0
• Requests still subject to public comment: 224
• Requests under substantive review: 684
• Requests referred to Customs and Border Protection for administrative feasibility: 0
• Requests approved: 0

To summarize—exclusion requests approved: 0; exclusion requests denied: 1,487.

Steel Product Exclusions—The data regarding steel product exclusions are difficult to summarize. Exclusions are being approved and denied. The precise criteria for approval are not being publicly revealed by the Bureau of Industry and Security at the Commerce Department. There have been reports that some approvals have come over the objections of domestic producers, but this has not been verified as far as I can tell. I continue to seek confirmation. Many requests are still pending that received no objections.

Lewis Leibowitz

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