Importers File Bogus Requests for Section 301 Trade Exclusions

After four years of the U.S. government imposing Section 301 tariffs on a wide range of Chinese goods, multinational importers and the army of Washington lobbyists they keep on the payroll are still looking for them to be removed. In theory, exclusions are supposed to be granted if an importer cannot source the same product or part from an American manufacturer. However, CPA has reviewed importers’ latest submissions and found a large majority of them to be without merit.

The Section 301 trade tariffs imposed by the Trump administration and kept intact by President Biden are the best leverage the U.S. has in any negotiation with China. Weakening them brings the U.S. back to pre-2018 when the trajectory was clear: the U.S. would outsource nearly everything eventually to Asia, led by China multinationals.

The Section 301 tariffs were primarily a punishment for China’s IP theft, though not every item targeted under the tariffs relates to intellectual property. For this reason, exclusions were given in the first year to importer companies who had convinced the USTR to remove tariffs on their imports. Those exclusions expired last year. Many members of Congress want the exclusion process to begin again.

Multinational importers have now had four years to source product elsewhere. Hundreds of them have not. Part of the reason is that these companies are small operations geared primarily to servicing China imports. They are distributors only and are not importing parts to make something else.

Others are larger trade associations that are plugged into China exporters. They are also asking for exclusions.

The Retail Industry Leaders Association (RILA) is looking for exclusions on face masks. If such exclusions would be granted, it would interview with the recently passed infrastructure law, which includes a provision to make personal protection equipment in America and stock the government warehouses with domestic N95 masks.

China masks are already circulating in the House of Representatives. Presumably, a RILA member sold them to the government. The tariff has not put them out of business.

Importers are required to demonstrate that their product line cannot be found in the U.S.

CPA has reviewed the petitions with custom fabricators (e.g., tool & die makers, foundries, mold-makers, etc.) and flagged the following exclusion petitions as being without merit. The products identified in these petitions can certainly be made outside of China, and even domestically, if the importers take the time to solicit custom fabricators. USTR should not grant any petition unless the importer can offer evidence that they solicited orders from custom fabricators outside of China.

Exclusion number: 20(aaa)(59)
Exclusion Description: Tailor welded blanks of hot-formed steel sheets

Exclusion requestors:
Schaeffler Group USA Inc (Note: Chinese manufacturer, no evidence attached. Claims “Developing a new manufacturer was not granted from the customer nor is it feasible given our previous investments in developing our manufacturing base in China.”)
Salsbury Industries, Inc.

CPA OBJECTION
• This type of equipment can be produced domestically by tool & die makers. Exclusion requestors should provide evidence they have solicited domestic tool & die makers.
• CPA supports the opposition filed by ArcelorMittal Tailored Blanks Americas

Exclusion number: 20(aaa)(64)
Exclusion Description: Gun safes with digital keypads, of base metal

Exclusion requestors:
SA Consumer Products, Inc.
Retail Industry Leaders Association
ProSteel Security Products

CPA OBJECTION
• Liberty Safe is America’s #1 producer of heavy-duty gun safes, home safes, fire safes and commercial safes. They should not be undercut by manufacturers in China using heavily subsidized steel.

Exclusion number: 20(aaa)(65)
Exclusion Description: Wind turbine hubs

Exclusion requestors:
Siemens Gamesa Renewable Energy S.A. (claims “There are no machined hubs readily available outside of China, unless significant capital is invested.”)
Vestas-American Wind Technology, Inc.
General Electric

CPA OBJECTION
• This type of equipment can be produced domestically by tool & die makers. Exclusion requestors should provide evidence they have solicited domestic tool & die makers. Turbine propellers are made here by GE partners, and others.

Exclusion number: 20(j)(7)
Exclusion Description:
Tines, carriages, and other goods handling apparatus and parts designed for use on fork lift and other works trucks
Exclusion requestors:
Hanway International LLC
Northfield Industries
Ballymore Co Inc
INTELLA PARTS COMPANY LLC
Trelleborg Wheel Systems Americas, Inc.
Seglian Manufacturing Group, Inc.
CSJB Holdings, Inc.
CMT Imports, INC.
Industrial Truck Association
East West Manufacturing LLC
TVH Parts Co. LLC
TRI Global Enterprises
Arrow Acquisition, LLC
Xtreme Manufacturing LLC.
Hyster-Yale Group, Inc.
National Retail Federation
Toyota Material Handling, Inc.
Crown Equipment Corporation
Information Technology Industry Council

CPA OBJECTION
• This type of equipment can be produced domestically by tool & die makers. Exclusion requestors should provide evidence they have solicited domestic tool & die makers.
• CPA supports the opposition filed by MSI-Forks

The above highlights only a few of the exclusions being requested that can be made domestically.

CPA recognizes that some product lines are niche. Businesses of all sizes are requesting exemptions for these niche items. Tesla is asking for an exclusion on graphite. China dominates that market.

There are importers that are only China product distributors and not manufacturers. A two-person run company called Mopeds Direct only sells small made-in-China mopeds. The tariff, however, has not put them out of business.

A company called NWE Brands appears to be an exclusive distributor of China products.

Sailrite Enterprises sells sewing machines for leather goods.  These are all made in China, too. And the market might not be big enough in the United States to make it here. But in most instances, those asking for tariff exclusions are not U.S. manufacturers who need parts from China to make a finished good here.

Many of the outstanding importers’ exclusion requests have suitable producers outside of China, and in some cases have local manufacturers. The argument that local manufacturers cannot ramp up production in time defeats the purpose of a tariff, which ultimately is designed to sustain and grow domestic manufacturing. These domestic producers will not be expanding their product lines, or production, if local buyers are focusing solely on imports.

WTO, Sen. Crapo, Rep. Rosen, Minority Leader McCarthy & More, Unite in China’s Favor