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Customs Officially Postpones Duty Payments for 90 Days

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While news of a duty deferral for certain imports seemingly surfaced some weeks back and promptly fizzled out, the U.S. appears ready to give the 90-day pause on payments.

In a notice posted late Sunday, U.S. Customs and Border Protection said that on Monday it will postpone for 90 days payment deadlines for certain estimated duties, taxes and fees to aid importers facing “significant financial hardship” brought on by the circulating COVID-19 virus.

“This temporary postponement applies to formal entries of merchandise entered, or withdrawn from warehouse, for consumption (including entries for consumption from a Foreign Trade Zone) in March 2020 or April 2020. CBP will not return deposits of estimated duties, taxes, and fees that have already been paid,” the notice said.

While it’s not yet entirely clear what goods the deferral will cover, what it won’t help with, is punitive China tariffs rolled out over the last 18-months. Those tariffs hit apparel and footwear, which already face some of the stiffest tariffs across all categories of U.S. imports—some synthetic garments are already subject to a 32 percent duty rate. For most textiles, travel goods, some accessories and apparel caught in the crossfire of the drag out trade negotiations between the U.S. and China, importers are paying a 25 percent additional tariff above and beyond the normal duty rate.

CBP said Sunday the deferral won’t apply to any merchandise subject duties levied under Section 301 of the Trade Act of 1974 or Section 232 of the Trade Expansion Act of 1962, the two categories President Trump called on to levy his tariffs on China in an effort to get the country to correct some of its errant trade practices. The 90-day deferral won’t apply to any merchandise subject to antidumping or countervailing duties either. The postponement of payments doesn’t apply to other debts owed to CBP, but for payments that can be deferred, CBP said interest won’t accrue during the 90-day period.

“For entries eligible for this temporary postponement, the requirement to pay the deposit of estimated duties, taxes and fees for the purpose of establishing the time of entry stated…is waved,” the notice said. “The timeframe for entry summary filing is not changed.”

Customs’ definition of “significant financial hardship” should cover most brands and retailers that have been forced to shutter their stores and, in many cases, scale back their e-commerce operations.

“An importer will be considered to have a significant financial hardship if the operation of such importer is fully or partially suspended during March 2020 or April 2020 due to orders from a competent governmental authority limiting commerce, travel, or group meetings due to COVID-19, and as a result of such suspension, the gross receipts of such importer for March 13-31 or April 2020 are less than 60 percent of the gross receipts for the comparable period in 2019,” CBP said. Importers don’t need to file documentation of their eligibility, but they “must maintain” that documentation as CBP said it may conduct future reviews to ensure compliance.

Trump has yet to comment on the decision, though past reports said the president had approved a duty deferral proposal, which he then refuted.

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