Hunton Retail Law Resource

Importers that have suffered “significant financial hardship” due to COVID-19 may qualify for a 90-day pay extension for certain tariffs. On April 19, 2020, following calls for trade liberalization to ease economic pressures, the Trump administration issued an executive order, along with a temporary final rule by the US Department of Homeland Security’s Customs and Border Protection (CBP), which postpones the time to deposit certain duties, taxes and fees. However, the 90-day pay extension is limited in scope and certain goods are not eligible for the extension.

The administration previously attempted to offer duty extensions. In late March, the CBP issued a notice suggesting it would ease payment deadlines for tariffs on a case-by-case basis. However, the CBP quickly reversed its position following strong opposition from US producers, including the American Iron and Steel Institute, which warned that delaying or reducing the collection of duties on unfairly traded goods would ultimately hurt US workers and businesses.

To qualify for the postponement, an importer must demonstrate “a significant financial hardship,” which means the importer’s operations were fully or partially suspended during March or April 2020 due to orders from competent governmental authorities imposing limits on commerce, travel or group meetings in the wake of COVID-19. Importers must also demonstrate that, as a result of this suspension, their gross receipts for March 13–31, 2020, or April 2020, are less than 60 percent of the gross receipts for a comparable period in 2019. Importers are not required to file additional documentation, but they nonetheless should maintain supporting documentation of their eligibility as part of their regular bookkeeping.

Goods eligible for postponement tariffs must have entered the country in March or April of 2020 and are not subject to anti-dumping duties, countervailing duties, duties assessed under Section 232 of the Trade Expansion Act, Section 201 of the Trade Act of 1974, or Section 301 of the Trade Act of 1974. Therefore, CBP expects importers to file separately for shipments containing both eligible and ineligible goods. The 90-day period runs from the date the deposit of eligible duties, taxes and fees would otherwise have been due but for the executive order. No interest accrues on the payments during the postponement period. However, this policy does not permit the return of any deposits of estimated duties, taxes or fees already paid.

Despite the policy’s limited nature, the president of the National Retail Federation, Matthew Shay, commended the measure, stating, “The White House announcement that the government is providing a limited duty deferral for importers is welcome news to retailers struggling to find any good news during this extremely difficult time. We encourage the administration to broaden these deferrals for additional relief. Retailers don’t build stores, buy products and hire associates only to close their doors for weeks at a time. The challenges to the retail industry brought on by this pandemic are severely acute, at best. This deferral provides some retailers with additional liquidity and better cash flow, giving hope for business continuity and a faster recovery once the pandemic has passed.”

The president of the Retail Industry Leaders Association, Brian Dodge, echoed this sentiment by stating the policy would improve the liquidity and cash flow for companies hit hardest by COVID-19, thus placing retailers in a stronger position to return to normal business operations. Still, Dodge urged the administration to go even further and defer all duty payments for at least 180 days.

This tariff postponement is one of several measures taken by the administration in the wake of the pandemic. As the pandemic unfolds, it remains to be seen whether further duty relief will come.