Recent Updates: Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China

• Pre-February 1, 2025: Goods loaded for transit prior to February 1, 2025, are exempt from the newly imposed International Emergency Economic Powers Act (IEEPA) duties.

• February 4, 2025: IEEPA Duties officially took effect, applying to all imported goods from the People’s Republic of China based on their declared value. These new duties are in addition to existing Section 301 tariffs already in place.

  • Currently, there is no mechanism for businesses to request exclusions from these duties.
  • The IEEPA Duties apply to Chinese goods entered for consumption or withdrawn from warehouses for consumption on or after 12:01 a.m. ET on Feb. 4, 2025.
  • There is an exception to the IEEPA Duties for goods entered for consumption or withdrawn from warehouses for consumption that were loaded onto a vessel at the port of loading or in transit on the final mode of transport prior to entry into the U.S. before 12:01 a.m. ET on Feb. 1, 2025. This is applicable even if the goods are entered for consumption after 12:01 a.m. ET on Feb. 4, 2025. Importers must certify these facts to U.S. Customs and Border Protection (CBP or Customs).

• Post-Implementation (February 4, 2025 onwards): Following the implementation, key developments and concerns have emerged:

  • Constitutional and Legal Challenges Anticipated: Legal experts and commentators have raised significant concerns regarding potential constitutional challenges to the Presidential Action. Key arguments include:

    • Executive Overreach of Trade Authority: The Executive Order’s imposition of a blanket 10% tariff on all goods from the People's Republic of China is seen as executive overreach into an area constitutionally reserved for Congress (Commerce Clause, Article I, Section 8). Utilizing a national emergency for sweeping tariffs raises concerns about separation of powers and circumvention of Congressional authority.
    • Questionable National Emergency Justification under IEEPA: Invoking IEEPA requires an "unusual and extraordinary threat." Justifying tariffs on all goods from the PRC due to the opioid crisis stretches the definition of this threat beyond its intended scope, questioning the proportionality and targeted nature of the response.
    • Delegation of Power Concerns: Broad authority granted to the Secretary of Homeland Security to modify tariff schedules raises alarms about the erosion of the separation of powers.

  • Drawback Duties: The Tariff EOs prohibit drawback for IEEPA Duties. Duty drawback cannot be claimed for imports subjected to IEEPA Duties upon importation and subsequent export. However, drawback can likely still be claimed on general duties paid on imports that were subsequently exported.

  • No Exception for De Minimis Value Entries: The Tariff EOs prohibit duty-free de minimis treatment for goods subject to IEEPA Duties. The 10% IEEPA Duty now applies to low-value shipments from China directly to U.S. consumers, regardless of value.

  • FTZs: Privileged Foreign Status Only: Imports brought into FTZs must be under privileged foreign status (unless qualifying for domestic status). IEEPA Duties are due when goods enter U.S. customs territory from the FTZ, not upon initial admission to the FTZ. No IEEPA Duties are paid if goods are exported from the FTZ.

  • Additional HTSUS Codes: The Tariff EOs direct the DHS Secretary to determine necessary modifications to the HTSUS to implement the IEEPA Duties. The HTSUS is used by importers to declare applicable codes upon importation.