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Take a deep breath

Feb 24, 2020

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This Is Uncomfortable
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Companies are worried tariff exclusions are getting harder to come by

Sabri Ben-Achour Feb 3, 2020
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David McNew/Getty Images

Companies are worried tariff exclusions are getting harder to come by

Sabri Ben-Achour Feb 3, 2020
David McNew/Getty Images
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The tariffs the U.S. has placed on Chinese imports come with exemptions — some lucky companies can get out of having to pay 25%, or sometimes much more, in tariffs.

The Wall Street Journal crunched the numbers on those exemption requests this morning: the U.S. Trade Representative granted about 35% of requests to avoid two early rounds of tariffs. There are still tens of thousands of requests waiting for a decision. But of all the decisions made so far on a third round, only 3% have been granted.

Riverdale Mills in Northbridge, Massachusetts, makes 3,500 different kinds of welded wire mesh, which can become things like lobster traps, crab traps and oyster trays.

James Knott is CEO of Riverdale Mills, and over the past two years he’s had to pay up to 40% tariffs on the wires and parts from China to make his mesh. So he filed for exemptions. Some of those products are on the list that only has a 3% approval rate so far.

“We applied for 117 exemptions,” Knott said. “We received seven out of those 117.”

Those exemptions only last for a year, so he reapplied. Some were rejected, and for a lot of them, he hasn’t heard back at all. It’s been four months. 

“We reapplied and have received no exemptions as of today,” Knott said. “You’re not given a reason why they were rejected. They just get rejected.”

So the same exemptions he was granted one year, he was denied the next. 

“It impacts our business dramatically because these products are not readily available in the U.S.,” Knott continued.

Nicole Bivens Collinson, a trade lawyer with Sandler Travis and Rosenberg, said decisions on tariff exemptions critical to so many businesses appear to be coming out a lot slower.

“It does seem there’s additional scrutiny,” she said. “I think part of that is that there’s just so much more volume of petitions that were filed this time.”

Part of the bottleneck, Bivens Collinson said, is that the reviews go through multiple agencies and not all are staffed up for the job. When exemptions are granted, companies are supposed to get refunds for the tariffs they’ve already paid. Knott, who makes the wire mesh, hasn’t gotten his refund — it’s been over a year.

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