Tariffs and Drawback

There have been many inquiries into our office about the latest on drawback for tariffs from Section 232 of the Trade Expansion Act of 1962 and tariffs from Section 301 of the Trade Act of 1974.

In March of this year, it was announced that additional duties would be added for steel (25%) and aluminum (10%) products coming into the U.S. and the proclamation was further amended when it was signed by President Trump. In April, CBP issued Cargo Systems Message Service (CSMS) #18-000315 that stated for Sec. 232 that “No drawback shall be available with respect to the Section 232 duties imposed on any aluminum or steel article.” As Section 232 duties are considered ordinary duties that would otherwise be allowable to be claimed under the drawback statute, this was an unusual decision. There is a process for exemptions and requests have been made to the USTR’s office, but the process of determining if those exemptions will hold is not an expeditious one. Eventually, we believe that this position will be challenged legally, but unless there is a favorable decision to overturn the administration’s position, drawback cannot be claimed on these additional duties.

Similar to Section 232 duties, there was much speculation as to what the final tariff list would hold for Section 301. There are currently 818 tariff lines that are impacted on the first list that take effect on July 6, 2018 and another potential 284 on the second list that could be impacted depending on the conclusion of a public hearing. In contrast to what was issued for Section 232, this past Tuesday CBP issued CSMS #18-000419 where they stated, “Section 301 duties are eligible for duty drawback.” This was a relief to the companies that will need to pay these additional duties.

It certainly was good news to hear that drawback can be claimed for Section 301 tariffs, but more time is needed to determine what the final outcome will be with Section 232. As always, be sure to stay tuned to our website (www.dutydrawback.com) so that we can alert you to the information that you need and how your drawback program might be impacted.