Updated Sep 17th – Tariff from Japan

Source: Lisa Ragan CBP

CBP Updates Guidance for Implementing U.S.-Japan Agreement and Modified Duties on Imports from Japan

Customs and Border Protection (CBP) on Monday evening, Sept. 15, issued guidance to the trade regarding the Sept. 4 Executive Order (EO) 14345, ““Implementing the United States-Japan Agreement”” (EO 14345). The EO orders modifications to the IEEPA and Section 232 tariffs applicable to imported articles of Japan to implement the framework agreement reached between the U.S. and Japan in July. 

As explained in the EO, under the agreement, the U.S. will apply a baseline 15% tariff on nearly all Japanese imports entering the U.S., alongside separate sector-specific treatment for automobiles and automobile parts and aerospace products.

Specifically, EO 14345 modifies the additional rates of duty applicable to products of Japan set forth in the following five previous presidential actions:

1. Executive Order 14257 of April 2 (Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual U.S. Goods Trade Deficits), as amended;
2. Proclamation 10908 of March 26 (Adjusting Imports of Automobiles and Automobile Parts into the U.S.), as amended;
3. Proclamation 9704 of March 18, 2018 (Adjusting Imports of Aluminum into the U.S.), as amended;
4. Proclamation 9705 of March 8, 2018 (Adjusting Imports of Steel into the U.S.), as amended;
5. Proclamation 10962 of July 30 (Adjusting Imports of Copper into the U.S.), as amended.

EO 14345 required the Commerce Secretary of Commerce to publish a notice in the Federal Register to make the necessary modifications to the HTSUS as necessary and appropriate to effectuate the EO. On Sept. 15, the Commerce Department posted the implementing notice, Implementing Certain Tariff-Related Elements of the United States-Japan Agreement, with the relevant HTSUS modifications for public inspection on the Federal Register website, with a scheduled publication date of Sept. 16. 

Guidance

Application of Modified Duty Rates

General Reciprocal Tariff

The reciprocal tariff for products of Japan is dependent on the Column 1 ad valorem or ad valorem equivalent duty rate applicable to the products.

• For a product of Japan with a Column 1 duty rate greater than or equal to 15%, the additional reciprocal tariff is zero. Use HTSUS heading 9903.02.72.
• For a product of Japan with a Column 1 duty rate less than 15%, the sum of the Column 1 and the reciprocal tariff rate is 15%. Use HTSUS heading 9903.02.73.

When submitting an entry summary to claim the 15 percent ad valorem duty rate on products of Japan, file using 9903.02.73 followed by the appropriate classification under Chapter 1 to 97, HTSUS. ACE will replace the duty reported for these two HTSUS classifications with the 15% duty rate.

Consistent with U.S. note 2(v)(xv) to subchapter III of chapter 99 of the HTSUS, as modified by Commerce in the notice implementing EO 14345, as posted in the Sept. 16 Federal Register, for any product of Japan subject to a specific or compound rate of duty under column 1-General, the ad valorem equivalent rate of duty of such product shall be determined by dividing the amount of duty payable under column 1-General by the customs value of the product. For example, if a product were subject to a specific duty of 50 cents per kilogram, and one kilogram of the product were entered with a customs value of $10, then the ad valorem equivalent rate of duty would be obtained by dividing 50 cents by $10, yielding 5%.

CBP said the above action applies to products of Japan entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on Aug. 7. As of Sept. 16, heading 9903.02.30 will no longer be available for use in ACE for entries of products of Japan that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on Sept. 16.

New HTSUS headings 9903.02.72 and 9903.02.73 will be deployed in ACE at 12:01 a.m. ET on Sept. 16 on the date that Commerce’s notice with the HTSUS modifications implementing EO 14345 will be published in the Federal Register. As an update to the guidance issued through CSMS 66146676 “Interim Guidance: Retroactive Implementation of the US-Japan Agreement” on Sept. 6, filers can update their previously filed entries to apply the newly issued HTSUS numbers after they are deployed on Sept. 16. For products covered by these new HTSUS provisions that are entered for consumption or withdrawn from warehouse for consumption on or after 12:01 a.m. ET on Aug. 7, filers should take action to correct entries as necessary to reflect the modified duty rate applicable under headings 9903.02.72 or 9903.02.73, as soon as possible within 10 days of the cargo’s release from CBP custody and prior to estimated duties being deposited to avoid needing refunds. For unliquidated entries for which estimated duties have already been deposited, importers may request a refund upon liquidation by filing a post summary correction. For liquidated entries, importers may request a refund by filing a protest pursuant to 19 U.S.C. 1514.

Civil Aircraft

Products of Japan that fall under the World Trade Organization Agreement on Trade in Civil Aircraft, except for unmanned aircraft, are no longer subject to additional tariffs imposed through:

1. Executive Order 14257 of April 2 (Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual U.S. Goods Trade Deficits), as amended;
2. Proclamation 9704 of March 18, 2018 (Adjusting Imports of Aluminum into the U.S.), as amended;
3. Proclamation 9705 of March 8, 2018 (Adjusting Imports of Steel into the U.S.), as amended;
4. Proclamation 10962 of July 30 (Adjusting Imports of Copper into the U.S.), as amended.

For such civil aircraft articles that are no longer subject to these additional tariffs, use heading 9903.96.02.

9903.96.02: Effective with respect to products entered or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time September 16, 2025, articles of civil aircraft (all aircraft other than military aircraft and unmanned aircraft); their engines, parts, and components; their other parts, components, and subassemblies; and ground flight simulators and their parts and components that are products of Japan, that otherwise meet the criteria of General Note 6 of HTSUS (Articles Eligible for Duty-Free Treatment Pursuant to the Agreement on Trade in Civil Aircraft), but regardless of whether a product is entered under a provision for which the rate of duty “Free (C)” appears in the “Special” sub column.

Except as provided above, all other provisions of Executive Order 14257, as amended, remain in effect.

Automobiles and Automobile Parts

Executive Order 14345 and Commerce’s notice implementing EO 14345, as scheduled for publication in the Sept. 16 Federal Register, modify the Section 232 duties on passenger vehicles and light trucks (automobiles) and automobile parts that are products of Japan and entered for consumption or withdrawn from warehouse for consumption on or after 12:01 a.m. ET on Sept. 16.

The Section 232 tariff on automobiles and automobile parts that are products of Japan is based on the ad valorem Column 1 duty rate applicable to the products. Currently all automobiles and automobile parts that are encompassed by HTSUS headings 9903.94.40, 9903.94.41, 9903.94.42, and 9903.94.43 have only ad valorem Column 1 duty rates, so ad valorem conversion is not required.

Automobiles

• For an automobile that is a product of Japan with a Column 1 duty rate greater than or equal to 15% ad valorem, the additional Section 232 duty rate is zero. Use heading 9903.94.40.
• For an automobile that is a product of Japan with a Column 1 duty rate less than 15% ad valorem, the combined Column 1 and additional Section 232 duty rate is 15% ad valorem. Use heading 9903.94.41.

Automobile Parts

• For an automobile part that is a product of Japan with a Column 1 duty rate greater than or equal to 15% ad valorem, the additional Section 232 duty rate is zero. Use heading 9903.94.42.
• For an automobile part that is a product of Japan with a Column 1 duty rate less than 15% ad valorem, the combined Column 1 and additional Section 232 duty rate is 15% ad valorem. Use heading 9903.94.43.

When submitting an entry summary to claim the 15% ad valorem duty rate on automobiles and automobile parts that are products of Japan, file using the appropriate HTSUS heading listed above followed by the appropriate classification under Chapter 1 to 97, HTSUS. ACE will replace the duty reported for these two HTSUS classifications with the 15% duty rate.

Report the 15% ad valorem duty on the Chapter 99 HTSUS classification and report the entry summary line value on the appropriate Chapter 1 to 97 HTSUS classification, CBP said.

Products Subject to Section 232

All products of Japan that are subject to Section 232 actions will continue to be exempt from Reciprocal tariffs. These Section 232 actions include:

1. Proclamation 9704 of March 18, 2018, (Adjusting Imports of Aluminum into the U.S.), as amended;
2. Proclamation 9705 of March 8, 2018, (Adjusting Imports of Steel into the U.S.), as amended;
3. Proclamation 10962 of July 30 (Adjusting Imports of Copper into the U.S.), as amended;
4. Proclamation 10908 of March 26 (Adjusting Imports of Automobiles and Automobile Parts into the U.S.), as amended.

CBP said filers should continue to file using HTSUS heading 9903.01.33 for products that are exempt from Reciprocal tariffs because they are subject to Section 232 actions.

The automobiles and automobile parts subject to the duties described above are subject to the stacking provisions of EO 14289, “Addressing Certain Tariffs on Imported Articles,” 90 FR 18907 (May 2), as modified by Proclamation 10947, “Adjusting Imports of Aluminum and Steel into the United States,” 90 FR 24199 (June 3).

For purposes of applying the above provisions, automobiles and automobile parts that are products of Japan subject to the 0% Section 232 duty under headings 9903.94.40 and 9903.94.42 are not considered to be subject to Section 232 automobile and automobile parts duties.

Exemptions from Reciprocal Tariffs

The other exemptions provided for under Reciprocal tariffs, (9903.01.25, 9903.01.30-9903.01.33, and 9903.01.34), continue to apply to products of Japan.