United States

How the tariff exemption process works


In the October issue of The Real Economy, we discussed how trade tensions between the United States and China continue to be a concern for middle market companies. In that issue, we answered some common questions about the possibility of exemptions and the difficulty and low success rate of the process to date. Since then, we have seen some success with the process.

In order to gain a better understanding of the process, RSM spoke with one manufacturing client about their experience. They were pleasantly surprised with the ease of the application process. In fact, they described the instructions at the government website as “outstanding.” Below are some key takeaways, based on our exchange with that client.

Is there a lot of paperwork?

The entire process is electronic and any additional information required by the application can be attached electronically.

What information is needed?

Some detailed information is required. For instance, in this particular case, the company was required to attach a document that described the chemical composition of the specific steel for which they were seeking an exemption. However, it was information they already had, and they felt that all of the information required was readily available. The application itself did not take them a significant amount of time.

Are the applications public or private?

The applications are public and anyone is able to comment on the application during the comment period.

What happens after the application is submitted?

It took approximately 30 days for the application to show up on the government website for comment.

How long was the comment period and what happens if someone comments on the application?

The comment period was open for about 60 days. This company did receive one objection from a U.S. supplier claiming to be able to supply the product that the company was requesting an exemption for. The company was able to submit a rebuttal to the objection to explain why they didn’t believe that the supplier could provide the exact product in question.

What happens after the comment period closes?

The company did not hear anything for approximately 30 days after the application was removed from the website. They then received a decision memo granting them their exemption for the product. The decision memo included an exemption number that can be provided to the import broker in order to avoid paying the tariffs when the product hits the U.S. border.

How long does the exemption last?

The exemption is good for one year from the date that the application was filed. So the company is currently in the process of applying for a refund for the tariffs paid from the date they submitted the application to the date the decision memo was received.

So what happens when the one-year exemption expires?

A new application must be filed every year. Because the entire process took approximately 90 days in total, the company is already considering applying for the next year. However, they believe they’ll be able to leverage most of the information gathered from the initial application and they do not believe the process will be a burden.

So should everyone apply for an exemption?

This is only one example; however, based upon the experience of this middle market manufacturer, if you believe your product is not available in the United States, it may be worth submitting an application for exemption.

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