The President signed on Friday, February 15, 2019, the Consolidated Appropriations Act, 2019, an appropriations bill to keep the government fully open. In the Joint Explanatory Statement (JES) from the House Appropriations Committee that accompanied the bill, Congress directs the Office of the U.S. Trade Representative (USTR) to create an exclusion process for the third tranche of Section 301 tariffs on China “no later than 30 days after the enactment of this Act, following the same procedures as those in rounds 1 and 2….”  This language does not tie a round 3 exclusion process to the level of the tariff (10% or 25%).  Significantly, though, this language in the JES was not included as part of the bill signed by the President and is therefore not legally binding.  Nevertheless, the JES expresses Congress’ intent and indicates that Congress expects USTR to begin an exclusion process covering goods on List 3 no later than March 17, 2019.

Before that date, the JES also indicates that USTR is expected to consult with the House Ways and Means Committee and the Senate Finance Committee regarding the nature and timing of the exclusion process and report back to these committees on the status of the round 3 exclusion process by March 17, 2019.

The third tranche of China Section 301 tariffs covers approximately $200 billion worth of goods, currently at a 10% duty rate. China and the U.S. are currently involved in trade negotiations and President Trump has declared that if they do not come to a deal by March 1, 2019 (or such later time as he may permit) then the List 3 tariffs will increase to 25%.

We will continue to monitor this situation. For more information on the Section 301 tariffs on China, please contact Nithya NagarajanCortney MorganJeffrey NeeleyRobert Stang, or Beau Jackson.