“Phase One” agreement with China provides some relief to supplement importers

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“Phase One” agreement with China provides some relief to supplement importers

Reduced tariffs will affect imports filed after February 14

Published: Tuesday, January 21, 2020

A partial trade agreement signed by the United States and China on January 15, 2020, will reduce U.S.-imposed tariffs on some imported Chinese goods used by U.S. dietary supplement and food companies, but it will leave tariffs on other commodities in place, at least for the short term.

The “Phase One” agreement reportedly covers many issues that have been at the heart of the U.S.-China economic conflict; a summary Fact Sheet issued by the office of the U.S. Trade Representative (USTR) is here.

Of most direct interest to AHPA members and the herb and supplement trade, USTR issued a pre-publication notice to announce that certain of the ad valorem tariffs that have been imposed on Chinese exports over the last two years will be reduced, effective on February 14, from 15% to 7.5%. More specifically, the reduced rate will apply to all of the commodities identified by formal HTSUS numbers in Annex A (and by informal descriptions in Annex B) in USTR’s Federal Register notice of August 20, 2019. [Note that in the August 20 notice the ad valorem tariff level was proposed to be 10%, but the rate was subsequently increased to 15% in a separate notice issued by USTR on August 30, 2019.]

In comments filed in this matter, AHPA listed numerous of the affected commodities that are used in dietary supplements and other herbal products manufactured and marketed in the United States. These include, among many others, various forms of a number of specifically identified spices (e.g., pepper; capsicum; cinnamon; nutmeg; cardamoms; seed of coriander, cumin, anise caraway or fennel; ginger; saffron; turmeric; vanilla beans; etc.); fruits (e.g., lemons; limes of the Citrus aurantifolia variety; and other citrus fruits); and other botanicals (e.g., black and green tea; kola nuts; mate; chicory root; ginseng; numerous essential oils; etc.). In addition, the reduced tariff rate will apply to several general HTSUS categories that cover many botanical extracts.

Importers of any commodity subject to the new tariff reduction may consider delaying imports until February 14 when the lower rate goes into effect. AHPA has been informed it is also possible to defer entry of imported goods for up to 15 days to take advantage of the lower rate, so companies may consider consulting with qualified customs brokers and international trade attorneys to assess the viability of this strategy to their particular circumstances.

USTR’s action to reduce certain tariffs following execution of the Phase One agreement applies only to those HTSUS commodities identified in the above cited August 20, 2019, notice. At least for now, previously established tariffs of up to 25% will remain in place for numerous other commodities, and they include, for example, the following: glass and plastic packaging materials; whey protein concentrates; numerous dried vegetables (e.g., carrots, garlic, onions, tomatoes, miscellaneous mushroom species, etc.) and fruits (e.g., barberries and citrus peel, among others); and numerous other plant-based ingredients and minerals used in supplement products.

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