Truce Over: Trump fires off new 10% tariff on $300 Billion worth of imports from China
- By:
- Kellie Lynch
- Date:
- Aug 1, 2019 5:36:59 PM
- Categories:
- Ocean Freight, Imports, Regulatory Updates, Customs House Brokerage, Market Updates, Asia, Tariffs
U.S. President Donald Trump took to Twitter on Aug 1 announcing a new 10% tariff on the fourth list of $300 billion dollars worth of imports from China, effective Sept. 1. This will add a tariff to just about all of the remaining imports from China that haven't already fallen victim to Section 301 duties. The 10% tariff will be in addition to any other applicable tariffs already in place on products on the list.
What products will be affected by the new tariff?
The new tariffs will apply to 3,805 product categories including livestock, meat and dairy products, floral products, fruits and vegetables, spices, apparel, shoes, chemicals, toys, sports equipment, TVs and electronics, musical instruments, and more. View the list of products in the Annex of Federal Register Notice 84 FR 22564 here.
According to the USTR, List 4 covers all apparel, footwear, and manufactured textile products but excludes pharmaceuticals, certain pharmaceutical inputs, select medical goods, and rare earth minerals.
*UPDATE* USTR delays implementation of some tariffs until Dec 15, easing holiday shopping season concerns
On Aug 13, USTR announced it would be implementing the 10% tariffs on $300 billion of Chinese imports in two phases, splitting the products into two lists. It also removed some products from the list based on health, safety, and national security concerns.
The USTR delayed to December 15 tariffs on products including cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.
View the lists here:
*UPDATE #2* U.S. increases tariffs on Chinese goods again
On Aug 23, “Twelve hours after China said it would retaliate against Mr. Trump’s next round of tariffs by raising taxes on American goods, Mr. Trump said he would bolster existing tariffs on Chinese goods," reported the New York Times.
President Trump instructed the United States Trade Representative (USTR) to increase by 5% the tariffs on approximately $550 billion worth of Chinese imports.
- For the 25% tariffs on approximately $250 billion worth of Chinese imports, USTR will begin the process of increasing the tariff rate to 30%, effective October 1 following a notice and comment period.
- For the 10% tariffs on approximately $300 billion worth of Chinese imports that the President announced earlier this month, the tariffs will now be 15%, effective on the already scheduled dates for tariff increases on these imports.
Why did the U.S. decide to levy tariffs on List 4 imports from China?
Trump cited Chinese negotiators "re-negging" on parts of the deal, and a lack of agricultural purchases from China as a main factors for levying the tariffs. He also claimed that his "friend President Xi" didn't stop the sale of Fentanyl to Americans.
Our representatives have just returned from China where they had constructive talks having to do with a future Trade Deal. We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing. More recently, China agreed to...
— Donald J. Trump (@realDonaldTrump) August 1, 2019
...buy agricultural product from the U.S. in large quantities, but did not do so. Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die! Trade talks are continuing, and...
— Donald J. Trump (@realDonaldTrump) August 1, 2019
...during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%...
— Donald J. Trump (@realDonaldTrump) August 1, 2019
...We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!
— Donald J. Trump (@realDonaldTrump) August 1, 2019
"Our representatives have just returned from China where they had constructive talks having to do with a future Trade Deal. We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing. More recently, China agreed to buy agricultural product from the U.S. in large quantities, but did not do so.
Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die!
Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%.
We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!"
Will there be a Product Exclusion process for List 4?
With the tariff on products on List 4 set at just 10%, we are not expecting the USTR to accept exclusion requests. However, if the Administration decides to further raise the tariff to 25%, the USTR may open up an exclusion process similar to the one used for List 3 products.
So what's a shipper to do?
Only one month of lead time before the tariff goes into effect certainly isn't much notice! Companies importing goods from China need to take a look at their upcoming shipments' projected arrival dates to see if there are any that will be subject to the new tariffs. It's also a good idea to explore any legal options for reducing or eliminating their exposure to these increasing costs.
Here are 5 tips from SupplyChain 24/7 for minimizing negative effects from the China trade tariffs on your supply chain:
- Start With The Big Picture: Head over to the Automated Commercial Environment system (ACE) to analyze your import data, and look into the Harmonized Tariff Schedule (HTS) codes of your products and their components.
- Find Alternatives To Your Current Supply Chain Partners: Identify alternative sources for components and raw materials in areas outside of China, like other Southeast Asia countries including Indonesia, Vietnam, or the Philipines.
- Consider Domestic Partners: Advantages of working with domestic manufacturing partners include greater IP security, lowered transportation costs, and high labor standards.
- Smaller Partners Can Produce Bigger Results: Smaller companies can avoid regulatory costs because their small size enables them to move quickly. They are often more agile and flexible than larger counterparts.
- Rethink Technology In Your Product Design & Development: Consider product redesigns or alternative components that can be used while still maintaining product quality.
Chinese negotiators are expected to visit Washington to continue their trade discussions in person in early September, with the hopes of reaching a comprehensive trade deal.
Resources:
- View List 4 goods in the Annex of the Federal Register - 84 FR 22564
- US China Tariffs: Consider Changing Your Supply Chain
- Tranche 4 tariffs by the numbers
- List 3 Exclusion Process begins on June 3
- Visit the List 3 Exclusion Requests Portal
