Section 301 tariffs set to be permanent feature of US trade policy

Image: © Skypixel | Dreamstime.com US importers should prepare for a prolonged era of Section 301 tariffs, stricter customs enforcement, and fewer opportunities to reduce penalties, according to trade consultancy CargoTrans. During a recent webinar, the company said Section 301 had evolved far beyond its original use against China, becoming the administration’s preferred legal mechanism for imposing tariffs on a growing range of imports. The latest measures include 25% on selected goods from Brazil, while further tariffs affecting China, the EU, Vietnam, India, and Mexico remain under consideration. CargoTrans said businesses should no longer think of Section 301 as a single-tariff programme. “301 is a broad-based platform. We can’t stop 301 because this is not ‘China 301’, it is a platform they are using to implement additional tariffs for many different reasons. So you are going to see a variation of 301s from here on,” said licensed customs broker and trade advisor Rennie Alston. He also argued that the legal authority effectively allowed the administration to impose tariffs across a range of policy objectives, adding that while the underlying subject matter may differ, “the strength behind the ‘just because’ is the authorisation to tax.” The expansion of Section 301 comes despite legal challenges from 25 US states, which have questioned the administration’s use of the tariffs. However, co-CEO of CargoTrans Nunzio DeFilippis believes those cases face “a lot bigger hill to climb” in challenging the administration. “Recalculate landing costs,” he advised. “Don’t treat Flip 301 as another temporary tariff. Yes, it’s being challenged, but this 301s are generally much more stickier than others in the past.” Alongside the new tariff regime, CargoTrans warned that the Customs and Border Protection (CBP) agency was entering a far more aggressive enforcement phase. “The customs position is that enforcement escalation is here to generate revenue,” said Mr Alston. According to him, the long-standing practice of reducing customs penalties by as much as 90% is disappearing. Instead, mitigation is now limited, with reductions of up to 50% available only to trusted traders and companies able to demonstrate written controls and robust compliance systems. CargoTrans also warned that CBP had adopted a “zero tolerance” approach. “Customs have said ‘no more warnings’,” Mr Alston urged, adding that enforcement was increasingly focused on recovering duties and penalties. The company urged importers to strengthen governance around tariff classification, customs valuation, and country-of-origin declarations, warning that errors in any of the three could expose businesses to allegations of tariff evasion. “Compliance is not a luxury, right? It is a requirement of demonstration,” Mr Alston underscored.. “No longer is it a best practice to have a compliance manual and the appearance of compliance. Appearance is nowhere in these enforcement escalations.” Beyond compliance, the speakers urged procurement teams to revisit supplier contracts, clearly allocating responsibility for future tariff increases and considering exit clauses covering actions by the US government. They also recommended that companies reassess sourcing decisions based on total landed cost rather than manufacturing price alone, taking into account transit times, supplier reliability, inventory costs, and tariff exposure. Looking ahead, CargoTrans warned, expect further Section 301 investigations before the end of the summer. “I think we’re going to see more,” concluded Mr Alston, adding: “I think tariffs are here to stay, in one form or another.”