First Tranche Comments

Filers submit first round of 301 exclusion requests

   The Office of the U.S. Trade Representative collected exclusion requests through Tuesday for the first $34 billion in Section 301 tariffs on products on China.
USTR on July 6 imposed 25 percent tariffs on $34 billion worth of goods (in 2017 import value) originating in China, another round of 25 percent tariffs on $16 billion worth of goods from China on Aug. 23 and a third tranche of tariffs — assessed at 10 percent across $200 billion worth of goods from China — on Sept. 24.

Regulations.gov indicated that USTR had received 9,610 comments and posted 2,869 comments, including product exclusion requests, as of 10:44 a.m. EDT.
Several filers requested bearings be excluded from the tariffs.

Ann Arbor, Mich.-based NSK Corp., which manufactures bearings, steering columns and precision products, said certain single row radial ball bearings classified under Harmonized Tariff Schedule Subheading 8482.10.5048 aren’t currently available domestically.

“These bearings are specifically designed and made for applications in the production of our U.S.-produced steering columns, which are a safety critical application of a vehicle,” NSK said.
The company has passed on a portion of its tariff costs to its customers, which will eventually hurt consumers, NSK said.

Cost competition and high customer demand spurred NSK to source from China, which has facilities to meet unique production requirements in a “highly competitive” business segment.
Irvine, Calif.-based CW Bearing USA requested that certain wheel hub bearings for use in the automotive industry under HTS Subheading 8482.10.5016 be excluded from tariffs, as the bearings used by the company aren’t available outside China and CW Bearing sources the goods from the facilities of its parent company, Cixi Group, which is located in China, the firm said.

CW Bearing and CW Manufacturing employ 54 people at offices in Tustin, Calif., and St. Louis and at a manufacturing center in Northville, Mich., and the company expects to employ about 150 people by 2022, the firm said.

“Our parent company does not provide us with the option of switching suppliers and doing so is simply not an option for our company,” CW Bearing said. “Even if changing suppliers was an option for our business, the GCrl 5 class bearing steel used to manufacture bearings is not available in the United States.”
Further, this raw material is also subject to a 25 percent Section 232 global tariff on steel, so importing the product for domestic use is “also not feasible,” the company said.
CW’s bearings also are used in safety-related applications like steering and braking, and the subject products must undergo extensive qualification, testing and validation processes that are “mandated” by customers and a “prerequisite to purchase in all cases,” the company said.

West Nyack, N.Y.-based General Bearing Corp., which has 90 employees, requested that tapered roller bearings under HTS Subheading 8482.20.0090 be excluded.
The subject products are available outside of China, but qualification of new sources for automotive and other customers is lengthy, involving site visits, design approvals, production of samples and rigorous testing, “often taking in excess of a year to complete,” the company said.

General Bearing has existing contracts with downstream customers and distributors that require products to have undergone the qualification process, so alternative sourcing isn’t a viable option to meet obligations set forth in existing contracts.

Crowell and Moring, filing on behalf of Siemens Medical Solutions, requested that certain 1.5-Tesla MRI devices classified under HTS Subheading 9018.13.0000 be excluded from the tariffs as such products are not covered by the scope of Beijing’s “Made in China 2025” plan to achieve primacy of cutting-edge manufacturing on the world stage, the filing states.
The manufacturing plan covers the more advanced 3-Tesla MRIs, the filing states. The technology of the MRIs with a 1.5-Tesla magnetic field was developed in Germany prior to 2003, with China-based manufacturing starting that year, the filing says.

USTR also already posted several rebuttals to and letters of support of exclusion requests.

Whirlpool Corp. opposed the exclusion request submitted on behalf of Culligan International Company for water filtration goods classified under HTS 8421.99.0040.

Whirlpool’s main contention was against any potential exclusion of water filters used in refrigerators and refrigeration products as those Chinese products interfere with the intellectual property (IP) of U.S. home appliance manufacturers.

A “significant portion” of the $145 million worth of products imported under the applicable HTS code last year either infringe on IP rights or are “outright counterfeit products” of filters sold by Whirlpool and other U.S. companies, Whirlpool said.

“Whirlpool has taken legal action against Chinese manufacturers that import patent-infringing and counterfeit filters as well as those companies and online platforms that resell the imports from China,” the firm stated. “Unfortunately, jurisdictional hurdles limit the effectiveness of these actions.”

Rep. Jeff Duncan, R-S.C., wrote to USTR in support of an exclusion request submitted by Electrolux Home Products for compressors used in refrigeration equipment, classified under HTS subheadings 8414.30.4000 and 8414.30.8050.

No U.S. manufacturer makes the subject compressors, but Electrolux is transitioning to a newer technology compressor, and once it completes its new investment in South Carolina in 2019, the company will be able to switch completely to non-Chinese suppliers for compressors, Duncan said.

“I support the [Trump] administration’s efforts to combat China’s unfair trade policies, but I also believe the administration should take steps to avoid harming U.S. manufacturers in the process,” Duncan wrote. “Electrolux is actively taking steps to transition away from Chinese suppliers of compressors. However, they need time to complete this transition.”

Granted exclusions will apply to all imports of a given product, and will not be company-specific, a USTR spokesperson said in an email.

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