December 23, 2020
While the 2021 Consolidated Appropriations Act included some benefit to Customs brokers, the renewal of the Generalized System of Preferences Act (GSP), the extensions of China 301tariff exclusions and the Miscellaneous Tariff Bill were not included. These exclusions will have an impact on customs brokers as to how they process and clear their customers’ imports at the beginning of the year.
GSP: Effective January 1, 2021, Customs brokers will need to collect and pay duties from their importers for merchandise that was eligible for duty-free treatment from approximately 120 designated beneficiary countries and territories. Instructions are forthcoming from Customs and Border Protection advising importers, through their brokers, to flag GSP eligible entries with a special indicator but requiring payment of the normal trade relations duty rate (Column 1) until the program is renewed. It is expected that once renewed, Congress will provide language in the renewal to allow for retroactive automatic refunds by CBP.
Section 301 China Tariff Exclusions: Effective January 1, 2021, hundreds of Section 301 China tariff exclusions will expire, requiring importers, through their brokers, to pay the 25% or 7.5% trade remedy tariff on their imports from China. At this time, there is no indication that Congress and the incoming administration will extend these exclusions or make the extension of the exclusions retroactive. It is expected that the new administration will revisit the Section 301 exclusion process altogether.
Miscellaneous Tariff Bill (MTB): All temporary duty suspensions found under HTS 9902 are expected to expire January 1, 2021, requiring importers, through their brokers, to pay the normal trade relations (Column 1) duty rate. If history repeats itself, the MTB will unlikely include a retroactive provision. It is expected the MTB will only be applicable from the time Congress passes the bill. While the National Customs Brokers and Forwarders Association (NCBFAA) remains hopeful that the MTB might pass in the first or second quarter of 2021, it is also noted that the MTB of 2018 didn’t pass until the third quarter.
Until all the above are passed, importers will rely on their Customs brokers to collect and pay the required duties to Customs.
Please reach out to Crane Trade Services should you have any questions regarding these matters.