When will Section 301 tariffs go away? 

Attorney Richard Wortman told a 2019 International Fastener Expo conference that it is “highly unlikely the current administration” will drop or reduce tariffs “unless some political advantage develops.”  

And even if there is a change in presidents after the 2020 election, the tariffs are likely to linger. Wortman, of GDLSK.com, noted that none of the Democrats in a recent debate vowed to end tariffs upon inauguration. Any new president will want to keep tariffs as a “negotiating tool with China,” Wortman observed.  

“It is going to take a while for tariffs to go away.”

The tariffs have become federal government income without being called a “tax,” he noted.

Various tariffs and duties are based on old laws “which hadn’t been used or had rarely been used,” Wortman explained. Antidumping duties date back to 1930 and Section 232 is from 1962. Almost all fasteners come under Section 301 of the Tariff Act of 1974.

The unilateral Section 232 was based on the Bay of Pigs and Cuba, he noted.

There are ways to reduce tariffs, Wortman emphasized. Jacuzzi moved more assembly from Southern California to China because a kit wasn’t subject to tariffs.

“Everybody is looking for everything” to lower the tariffs it pays. Wortman termed it “tariff engineering” and he suggested importers turn to tariff consultants.

  • For example, commissions to buying agents are “not dutiable” but selling agents “dutiable.” An importer can save tariff costs by “retrofitting” its agency group.

And are commissions “management overhead” and not related to the imported goods? Wortman asked.

There are possible tariff exclusions, such as a product made only in China or on specific machinery. But any exclusions are “very specific,” Wortman cautioned. Your competitors can “object” to exclusions for you.

Look to see if a competitor has filed for an exclusion, thus saving you the filing process.

The majority of exclusion applications are denied, Wortman said.

Shipping products from China to Vietnam or other countries – a practice known as transshipping –  has been tried and can be risky. 

“People go to jail for that,” Wortman cautioned.

Importers need to know where their fasteners originate, Wortman said. “Trust, but verify. Go to the facility.”

U.S. Customs is increasing bond issues to cover projected tariffs. Insurance companies are wanting to be paid. Deposits may take five years to resolve, Wortman warned.

Importers’ bonds are being “saturated” by the tariffs and they are receiving insufficient notices from Customs.

“Importers need to look ‘prospectively’ rather than ‘retrospectively’ and project out for a year.”

Wortman was dubious about the ultimate value of tariffs such as those on soybean exports. Tariffs can be “killing business on one side and not helping with countervailing.”