In 2018, the United States Trade Representative (USTR) initiated a tariff exclusion process aimed at allowing businesses to seek protection from levies imposed on Chinese products. Companies were required to demonstrate that the tariffs would result in 'severe economic harm' to the firm or US interests. They also had to prove that alternative products were not readily available outside of China or that the product in question was not strategically important to China.
Over the period from 2018 to 2020, USTR received approximately 53,000 exclusion requests but rejected 87% of them, as per a review conducted by the Government Accountability Office (GAO). The GAO review highlighted 'inconsistencies' in the review process at USTR and noted that the agency failed to fully document its internal procedures.
Furthermore, in 2019, the Commerce Department's inspector general identified deficiencies in a separate exclusion process managed by the agency for Section 232 tariffs on countries other than China. The inspector general's report revealed 'a lack of transparency' that raised concerns about potential improper influence in the decision-making for tariff exclusion requests. A subsequent report in 2021 concluded that US companies were being denied exclusions based on incomplete and contradictory information.
The lack of clarity and predictability in the exclusion process during the previous administration has raised apprehensions that exclusions could be manipulated to favor special interests. The challenges identified in the review reports underscore the need for greater transparency and consistency in the tariff exclusion process to ensure fair treatment for businesses seeking relief from tariffs.
