The application process exemptions from list 4A tariffs on U.S. imports from China under the section 301 program closed Jan. 31. There were a total of 8,783 exemptions filed with the U.S. Trade Representative. List 4A covers $108 billion of imports according to Panjiva analysis. By contrast, the previous exemption process, covering list 3 tariffs, resulted in 30,285 exemption requests on $200 billion of goods.

U.S. business expectations for the exclusion process seem to be sliding, with only 81 exclusions per billion dollars covered submitted in list 4A. This is down 46.3% from the 151 exclusions per billion dollars that were submitted for list 3. The slowdown may be partly due to the Phase 1 deal signed between the U.S. and China in the middle of the application period, which has cut the tariff rate to 7.5% beginning February 2020 from 15.0% in September 2019.

As mentioned in Panjiva research of Oct. 17, 2019, the list 3 figures were skewed by Arrowhead Engineered Products, or AEP, which submitted 10,221 exemptions or 33.7% of the total. Removing AEP shows that there were 100 exclusion requests per billion dollars of coverage rather than 81 with AEP.

The top product categories requested in list 4A include tools, miscellaneous plastics and miscellaneous textiles, with 630, 445 and 368 requests respectively. All three product categories show the effects of tariffs. Imports of tools fell 22.3% year over year in the three months to Nov. 30, while miscellaneous plastics and miscellaneous textiles fell by 7.4% and 4.6% respectively.

All three had been on an upward trend since 2016, and show a rapid reversal once list 4A came into effect Sept. 1, 2019.

With AEP absent from list 4A exemptions, Milwaukee Electric Tool Corp. took the top spot with 979 requests for tools, accessories and worksite apparel. Panjiva data shows that Milwaukee has been present in every list so far, getting denied for seven requests and approved for five in list 1 and list 2. The company increased its submissions for list 3 as it submitted 408 requests, which are still pending. Notably, while Milwaukee submitted but then withdrew 327 requests in list 4A, an analysis of the requests shows that many may have been withdrawn and resubmitted.

Other companies with a high number of requests include Michigan Ladder Company, Tractor Supply Co. and GoPro Inc. Michigan Ladder submitted 60 list 4A requests after being rejected in list 3, while Tractor Supply asked for 71 exemptions covering various articles like bird feeders, throw pillows, wall decor, boots and tarps. Tractor Supply was also rejected in list 1 and list 2, but it is still waiting for an answer on 70 list 3 requests.

Finally, GoPro submitted 13 requests covering plastic enclosures, batteries and holders related to their line of portable cameras. GoPro had not submitted any requests in previous lists and illustrates the movement of Section 301 tariffs into consumer goods.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.