C.H. Robinson (NASDAQ: CHRW) believes many American businesses could lose out on rightfully owed money if they don’t act soon. The logistics giant has run data analysis on Section 301 China trade tariffs, which are eligible for exclusions, and found that American companies have not acted in securing approvals for exclusions written into the tariffs by the Trump administration.
Mike Short, C.H. Robinson president of global forwarding, told FreightWaves that the current tariff exclusions expire on Dec. 31, and if companies have not applied for refunds for tariffs paid on an exempted product by then, they will lose out on the opportunity to recoup that money.
“We’ve been proactively reaching out to our customers,” he said, noting that the company has been able to help several companies recoup funds. While the future of the tariffs is uncertain, at this point, the exclusions are limited.
“Tariffs are indefinite at this point [so] our guidance to our customers is we don’t see any changes coming until these exclusions run out,” Short added.
Originally enacted as part of the U.S. Trade Act of 1974, Section 301 allows the president to take action, including tariffs, “to obtain the removal of any act, policy or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable or discriminatory and that burdens or restricts U.S. commerce.”
In 2018, the Trump administration determined China’s acts and policies toward technology transfer, intellectual property and practices met the criteria as set out in the 1974 trade act and instituted tariffs on certain goods from China valued at approximately $1 billion.
When the tariffs were being considered, USTR created a process through which interested parties could request particular products be excluded from the tariffs. As such, some American businesses became eligible to apply for tariff exclusions. These exclusions allowed for exemptions from certain Section 301 tariffs classified within a 10-digit Harmonized Tariff Schedule (HTS).
Since March, the USTR has exempted certain medical products from Section 301 tariffs in several rounds of exclusions and more could be coming. But the exclusions don’t only apply to medical products; nearly two-thirds of goods imported from China are potentially eligible for Section 301 tariff exclusion. C.H. Robinson noted that its analysis has identified $980 million in value of eligible products.
Short noted that the process to identify what is eligible and what is not is complicated and, in many cases, product-specific – C.H. Robinson estimates 96% are product-specific.
“There’s millions of classifications and within those it runs the gamut,” he said. “It can come down to the specific makeup of the product. … It’s just all over the place … and when you complicate the issue with an importer bringing in thousands of products, it becomes even more complicated.”
C.H. Robinson’s Trade & Tariff Insights hub provides the latest updates in the Section 301 tariffs, but it serves as more than just an information resource, Short said.
“The Trade & Tariff Insights hub is like having your very own global trade concierge service with weekly updates on the changing global trade marketplace along with custom insights and commentary from our leading global trade experts to help you make sense of it all,” Short said. “As one of the world’s largest global logistics platforms, we are dedicated to using our information advantage to help our customers solve complex global logistics challenges, including ever-changing trade issues, so they can focus on operating their business.”
Wheel Pro, which designs and distributes wheels, was able to recoup tariff money by allowing C.H. Robinson to utilize its Navisphere technology to analyze its imports.
“It was great to work alongside C.H. Robinson’s team as we navigate a challenging global trade climate,” said Holly Smith, director of logistics at Wheel Pros. “Not only have they saved us many hours of work via their technology and global trade expertise and been a trusted partner in navigating compliance issues, but they helped us successfully uncover and submit for a substantial refund.”
The U.S.-China trade war has added another layer of complexity to what has been a challenging global transportation market over the past year,” Short said.. “As we have consulted with businesses of all sizes, it’s clear that the biggest barriers to duty recovery for these companies are a lack of time, data, and expertise to navigate the complex and lengthy application process. With our global suite of services and technology built by and for supply chain experts, we help customers cut through the clutter, save time by automating processes, and maximize refund potential. This is especially important now as the pandemic has so many businesses seeking cost savings.”
Robinson said that companies must first determine if the goods they are importing qualify for a tariff exclusion and then perform the time-consuming task of comparing the specific 301 exclusion to the HTS codes to find a match. C.H. Robinson said it is able to handle this process through data comparisons, streamlining the process for businesses.
For companies that have already paid tariffs, refunds are possible. It can take 60 to 90 days or more, though, to receive that refund.
It is unclear if the exclusions will be extended, and the change of the presidency to Joe Biden could also input additional uncertainty. Whether a Biden administration will continue the tariffs is not known at this time.
Short stressed that businesses should assume the exclusions will expire on Dec. 31. If they think their imports were eligible for the exclusion, now is the time to find out because once Dec. 31 passes, they will not be able to revisit the exclusions.
“I think it’s important that our customers know we can deliver these savings,” Short said. “Our customers already importing into the United States already have a complicated and difficult compliance structure” that tariff exclusions just adds to that.