Continuing Trend: Section 301 Machinery Exclusion

A total of 185 Section 301 exclusion requests for machinery used in domestic manufacturing have been filed as of Dec. 19, 2024. Of those, 136 requests remain open for opposition or support from interested parties or for responses from the requestors. Currently, 49 exclusion requests are under review by the United States Trade Representative (USTR). The first exclusion request, filed on Oct. 21, 2024, has been under USTR review since Nov. 21. To date, the USTR has not issued any decisions to grant or deny any machinery exclusion request.

The Section 301 exclusion process, which opened in October 2024, continues to attract applications from U.S. manufacturers and importers of machinery used in domestic manufacturing. Companies interested in importing machinery from China for domestic manufacturing still have the opportunity to submit an exclusion request by March 31, 2025. Any granted exclusion will be effective from the date of publication of the exclusion determination in the Federal Register and will extend through May 31, 2025.

A total of 317 subheadings in Harmonized Tariff Schedule (HTS) Chapters 84 and 85 are eligible for consideration by the USTR for temporary exclusion from Section 301 duties. If a company seeks to exclude two or more pieces of manufacturing equipment, a separate request must be submitted for each item. Once an exclusion request is filed, interested parties have 30 days from the date the request is posted on the docket to respond, either to object to or support the exclusion. Requestors then have the later of 15 days after the posting of a response or 15 days after the closing of the 30-day response period to reply to any responses. The USTR will then review the request, responses and replies and periodically announce decisions. Decisions to grant exclusion requests will be published in the Federal Register, and decisions to deny exclusion requests will be posted on the USTR Comments Portal.

An effective exclusion request includes several key elements: a 10-digit HTS code, a detailed description of the manufacturing equipment, information on whether the equipment is subject to an antidumping or countervailing duty order, details about the equipment's use for domestic manufacturing, the availability of comparable equipment from U.S. or third-country sources, and whether the equipment is strategically important or related to the "Made in China 2025" initiative or other Chinese industrial programs. Attachments can be submitted as either public or business-confidential versions.

Looking Forward

The USTR has not indicated any intention to extend the exclusion process beyond May 31, 2025. As the new presidential administration takes office on Jan. 20, 2025, the likelihood of extending the exclusion period is even smaller, and the uncertainty surrounding the new administration's exclusion review will increase. Therefore, companies interested in importing machinery from China for domestic manufacturing should submit the exclusion requests as early as possible.

If you have any questions about the Section 301 exclusion process, please feel free to reach out to the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.