New Duties on China Goods to Crush Fentanyl Supply Chain
Published Date: 3/6/2025
Notice
Summary
Starting March 4, 2025, the U.S. is raising extra taxes (duties) on certain products coming from China, including Hong Kong, to fight the flow of synthetic opioids. This change affects importers and businesses dealing with these goods, making some products more expensive to bring into the U.S. The goal? To cut down on dangerous drugs entering the country by hitting their supply chain where it hurts.
Analyzed Economic Effects
8 provisions identified: 3 benefits, 5 costs, 0 mixed.
Tariff increase to 20% on China goods
Starting at 12:01 a.m. eastern standard time on March 4, 2025, covered products of the People's Republic of China (including Hong Kong) will be subject to an additional ad valorem duty increased from 10% to 20% under new HTSUS heading 9903.01.24. This applies to articles entered for consumption or withdrawn from warehouse for consumption on or after that date, except for specified statutory exceptions.
Additional duty stacked on other charges
The new 20% ad valorem duty in HTSUS heading 9903.01.24 applies in addition to all other applicable duties, taxes, fees, exactions, and charges, and products covered remain subject to antidumping or countervailing duties where applicable. No drawback (refund) is available for the additional duty.
Temporary duty exemptions still face surcharge
Products of China that are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99 of the HTSUS will nonetheless be subject to the additional 20% ad valorem rate imposed by heading 9903.01.24.
Foreign trade zone treatment changed
Articles that are products of the PRC (excluding 50 U.S.C. 1702(b) exceptions) and are admitted into a U.S. foreign trade zone on or after 12:01 a.m. eastern standard time on February 4, 2025, must be admitted as "privileged foreign status" and will be subject to the duties imposed by the Executive Order upon entry for consumption.
Repairs/assembly values also hit by surcharge
For entries under subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional 20% duty applies to the value of repairs, alterations, or processing performed in China or Hong Kong. For heading 9802.00.80, the additional duty applies to the value of the article assembled abroad (in China or Hong Kong) less the cost or value of U.S. products.
De minimis (low-value) entries remain allowed—for now
Articles of China/Hong Kong covered by heading 9903.01.24 that are otherwise eligible for the administrative "de minimis" exemption under 19 U.S.C. 1321(a)(2)(C) may continue to request de minimis entry and clearance until the Secretary of Commerce, in consultation with the Secretary of the Treasury, notifies the President that systems are ready to collect the tariff revenue. The de minimis exemption may cease upon that notification.
Short transit exemption for shipments already en route
Goods of China/Hong Kong that were loaded onto a vessel at the port of loading, or in transit on the final mode of transport prior to entry into the U.S., before 12:01 a.m. eastern time on February 1, 2025, and that are entered for consumption (or withdrawn from warehouse) after 12:01 a.m. on February 4, 2025 and before 12:01 a.m. on March 7, 2025, are not subject to the additional duty if the importer certifies under HTSUS heading 9903.01.23.
Statutory exceptions remain excluded from surcharge
Imported products of China that are encompassed by 50 U.S.C. 1702(b) are not subject to the additional ad valorem duty under HTSUS heading 9903.01.24, but such qualifying products (other than personal use items in accompanied baggage) must be declared and entered under HTSUS heading 9903.01.21 or 9903.01.22 as appropriate.
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