The toy industry dodged a major bullet in December when duties on List 4B of the Section 301 tariff actions were called off due to the Phase One trade agreement with China. It was welcome news despite many toymakers having already absorbed financial losses due to the off-again-on-again nature of the tariff threat. While the majority of toys remain unaffected on the surface, earlier duties imposed on certain raw materials used to complete finished toys remain. Now, amid the COVID-19 pandemic, the U.S. is offering payment deferment of duties and fees for importers that “have faced a significant financial hardship due to the outbreak.”
Under a newly issued executive order from President Donald J. Trump, the Treasury Department and Customs and Border Protection issued a joint Temporary Interim Final Rule providing the option for a 90-day deferment period on the payment of duties, taxes, and fees by certain businesses.
“By postponing the deadline to deposit certain duties, taxes, and fees for 90 days, we are providing much-needed relief to affected businesses,” said Treasury Secretary Steven T. Mnuchin in a statement. “This will protect American jobs and help these businesses get through this time.”
“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,” says Matthew Shay, president and CEO of the National Retail Federation. “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 catch is that while the new action should help retail, it “does not change deadlines for tariffs and fees for goods subject to antidumping and countervailing duties (AD/CVD), and Section 201, 232, and 301 Trade Remedies.” Much of the tariff talk over the past year pertained to Section 301, which was modified on March 25 due to COVID-19 but remains in effect.
