Section 301 Exclusions Expired: Now What?
With many Section 301 exclusions now expired, importers face renewed tariff pressure. Here's how to adapt your sourcing strategy.
The expiration of numerous Section 301 tariff exclusions has left many importers scrambling to adjust their cost structures. If your products lost their exclusion status, here's your action plan.
Understanding the Impact
When exclusions expire, products immediately become subject to the full Section 301 tariff rate - typically 25% for List 1-3 items and 7.5% for List 4A. This can devastate profit margins overnight.
Immediate Actions to Take
1. Verify Your Classification
Double-check your HTS codes. Misclassification is common and could mean you're paying unnecessary tariffs. Consider hiring a classification expert for complex products.
2. Explore Alternative Sourcing
Countries to consider for manufacturing relocation:
- Vietnam - Strong electronics and textile manufacturing
- India - Growing capabilities in pharmaceuticals and textiles
- Mexico - Proximity advantage for time-sensitive goods
- Thailand - Established automotive and electronics sectors
3. Apply for New Exclusions
While challenging, USTR occasionally opens new exclusion processes. Document how tariffs harm your business and consumers.
Long-term Strategies
Beyond immediate fixes, consider structural changes to your supply chain:
- Invest in supply chain mapping to identify vulnerabilities
- Build relationships with multiple suppliers across different countries
- Consider near-shoring for faster response times
- Evaluate vertical integration opportunities
The key is flexibility. Trade policies will continue evolving, and businesses that can adapt quickly will thrive.