June 30, 2022 – The White House, continuing its efforts to escalate economic measures in response to the Russian Federation’s invasion of Ukraine, has published a list of 576 provisions of the Harmonized Tariff Schedule of the United States (“HTSUS”) under which Russian-origin products will be subject to a 35% rate of duty beginning July 27, 2022.
On April 8, the United States passed the Suspending Normal Trade Relations with Russia and Belarus Act (“Suspending NTR Act”), which stripped non-discriminatory tariff treatment for products of the Russian Federation and of the Republic of Belarus. The Suspending NTR Act imposed “Column-2” duty rates on all Russian and Belarussian products and established that the President may increase the Column-2 rates of duty applicable to those products.
On June 27, United States President Joseph Biden issued Presidential Proclamation 10420 announcing his decision to increase the Column-2 duty rate to 35% on certain Russian-origin products to be set forth in an Annex to the Proclamation. The White House subsequently released the Annex, which covers a wide range of products across different HTSUS chapters, including those that cover minerals, chemicals, plastics, rubber, wood and paper, metals, vehicles and aircrafts, and numerous other articles. Notably, certain Russian-origin products (including certain energy products, fish and seafood, alcoholic beverages, and non-industrial diamonds) have already been banned from importation into the U.S. customs territory per prior executive orders (EO 14066 (Mar. 8, 2022) and EO 14068 (Mar. 11, 2022)).
The Russian Federation and the Republic of Belarus also will now formally join the ranks of Cuba and North Korea as countries subject to Column-2 rates of duty under General Note 3(b), HTSUS. This represents a further step to isolate Russia from the global trade community and additional measures to rebuke Russia’s actions and apply pressure may follow. For example, US Trade Representative Katherine Tai expressed eagerness to work with Congress to enact legislation that will allow the tariff proceeds to be used to help Ukraine, which “will send an important message to Russia that it will have to pay for the costs of its war.” US representatives Panetta (D-CA) and Rice (R-SC) also recently introduced the Expanding Trade Sanctions on Russia Act, a bill that would swiftly embargo additional products imported from Russia.
Importers should continue to assess their exposure to, and weigh the risks of, Russian manufacturing in their supply chains. Where there are opportunities to shift sourcing from Russia to third countries or to transition key manufacturing processes to third countries, importers should consider the viability and impact of those alternatives from a customs perspective.
For further information, please contact:
John Brew, Partner, Crowell & Moring