Attached is a link to the official Federal Register notice that increases the duty rate to 25% for articles subject to Section 301 List 3.  The third list of goods from China goes into effect Friday, May 10th at 12:01 a.m.

KPMG Trade & Customs team wanted to draw attention to an important difference in this Federal Register Notice which should be considered as you calculate the impact of the increased tariff. The notice indicates two criteria must be met for the 25% tariff to take effect on List 3 goods. The criteria is as follows:

1. Entered on or after Friday, May 10, AND
2. Exported to the US on or after Friday May 10.

This addition of the “Exported to the U.S. on or after Friday May 10” is an important distinction from prior USTR notices. Thus, List 3 goods that are already “on the water” will likely be subject to only 10% duty, as long as an the importer can prove the export date is before May 10.

The exact language from the Federal Register Notice is as follows:

Effective with respect to goods (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States is modified:”

As a duty mitigation strategy, KPMG recommends importers participating in reconciliation to flag entries for reconciliation and perform an immediate first sale analysis on the transaction. KPMG may assist with initial first sale assessment to gather relevant facts and information concerning the transaction from a U.S. Customs perspective.

KPMG’s Trade & Customs remains available to provide support during these efforts. Email John McLoughlin for more information.

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