Does anyone else remember that old TV show Can You Top This? The shtick was for audience members to send in jokes, which the cast of on-screen comedians tried to “top” with funnier ones of their own. Hilarity ensued.
That premise seems to have been revived for current trade disputes although, unlike the original, no one’s laughing. The United States and China keep trying to outdo each other with multiple rounds of tariff increases. While originally intended as Section 301 retaliation for China’s intellectual property practices, they now have taken on a life of their own. Their only positive impact thus far is that I’ve gotten lots of ideas for blog articles.
The latest “Round Three” tranche of duties is set to be effective on September 24, 2018. Approximately $200 billion in Chinese-origin imports will be subject to a tariff rate of 10 percent, scheduled to increase to 25 percent on January 1, 2019. 6,031 tariff subheadings were proposed for coverage, and 5,745 were included in the retaliation lost following a hearing and public comment period.
Of those, 11 are covered in part, including subheading 8517.62, which covers “Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus.” Of all the products classified there, only “Modems, of a kind used with data processing machines of heading 8471 [ADP machines]”, and “Switching and routing apparatus”, will be subject to the tariff. The amended version of subheading 8517.62 is available here.
Where It Stops, Nobody Knows
China has responded by imposing an additional tariff on U.S.-origin imports of approximately $60 billion in value. It’s also mulling a reduction on tariff rates for some articles; whether these would apply to U.S.-origin items is as yet uncertain.
Anticipating the Chinese counter-retaliation, the Trump administration already has an additional round of tariffs under consideration.
Shelter from the Storm?
In an attempt to mitigate some of the harmful effects of higher tariffs on individual companies, the Trade Representative’s office established an exclusion request process that it recently expanded to cover the second round. The deadline for filing requests is December 18, 2018. As with exclusion requests for the first round (deadline of October 9 coming up fast!), these should use the USTR form. The exclusion process for Round 3 has not yet been established.