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02 August 2018 US to raise tariffs to 25% on $200b worth of Chinese origin goods; comment period extended to 5 September On 1 August 2018, United States (US) Trade Representative (USTR) Robert Lighthizer announced that he is considering an increase in the level of additional duties levied on a previously proposed list of 6,031 products by Harmonized Tariff Number (HTS) imported from China (referred to as "List 3" and representing additional goods not previously identified under the 25% tariff imposed 6 July on US$34b1 of goods (List 1) or the pending imposition of 25% tariff on $16b of goods (List 2).2 For background, see EY Global Tax Alerts, US imposes first set of tariffs on China origin products; publishes list of $34 billion in goods subject to additional 25% duty effective 6 July, dated 15 June 2018 and USTR proposes tariffs on $200b in additional Chinese goods, following $34b of tariffs made effective 6 July 2018, dated 11 July 2018. The USTR initially proposed additional duties of 10% ad valorem on List 3 items covering $200b worth of imported Chinese goods, but at the direction of the President, the figure may now rise to 25%. The list of Chinese products potentially subject to the 25% additional duties can be found in the Annex of the USTR's 17 July 2018 Federal Register notice.3 USTR Lighthizer stated that "[t]he increase in the possible rate of the additional duty is intended to provide the Administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens." Along with the possible increase in duty rate, the USTR extended the written comment period for List 3 from 30 August 2018 to 5 September. The USTR similarly extended the deadline for interested parties to request an appearance at the public hearing to 13 August. Importers should review their products imported from China to confirm whether they are impacted by the final list. Those who are negatively impacted by the additional duties, including manufacturers, distributors and consumers, should map their complete, end-to-end supply chain to fully understand the extent of products impacted, potential costs, alternative sourcing options, and to assess any opportunities to mitigate impact. They should also consider submitting comments before the 5 September deadline as well as requesting to appear at the public hearing before the 13 August deadline. Companies exporting US goods to China, as well as Chinese companies who rely on imported US goods, should likewise review their products to confirm whether they are included on China's final list. As is apparent from the latest US action, the situation is very much in flux. Lists of products subject to additional duties in the US or in China may change or expand. Any company involved in US/China trade is encouraged to identify the potential impact of additional duties and develop duty avoidance or mitigation strategies. Immediate actions for such companies could include:
2"Statement By U.S. Trade Representative Robert Lighthizer on Section 301 Action," USTR Press Release, 1 August 2018. See https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/august/statement-us-trade-representative. 3 "Request for Comments Concerning Proposed Modification of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation," 83 Federal Register 33608, 17 July 2018. See https://www.federalregister.gov/documents/2018/07/17/2018-15090/request-for-comments-concerning-proposed-modification-of-action-pursuant-to-section-301-chinas-acts. Document ID: 2018-5929 |
