It seems that every time you turn around, there’s something new in the trade war with China. Last Friday afternoon’s announcement tops them all. So much for a quiet weekend.
Round 4 Tariff Established
Last week began with the long-awaited notice that an additional 10 percent import tariff will be imposed on those Chinese products that heretofore escaped the preceding rounds of Section 301 duties. This expanded coverage was proposed in May and follows a hearing and comment period. After explaining that tariffs on imports valued at $250 billion had failed to change China’s position, the Trade Representative’s office decided that hitting another $300 billion in trade should do the trick. Everyone loves an optimist, right?
The Round 4 tariff will take effect in two stages. Most goods will be covered on September 1, 2019, with a select group of mostly consumer products deferred until December 15. USTR also advised that “Certain tariff subheadings proposed in the May 17 notice have been removed from the final list of tariff subheadings subject to additional duties, based on health, safety, national security, and other factors.” The agency has not provided a separate list of those excluded subheadings.
Later in the week, China unveiled its own retaliatory tariffs on $75 billion in imports from the United States. The rates will be 5 or 10 percent and have effective dates of September 1 and December 15, 2019, depending on the product.
Nothing Succeeds Like Excess
Soon after this Chinese response was announced, El Jefe raised the ante by Tweeting his decision to place an additional 5 percent tariff increase on all Chinese merchandise subject to Section 301’s coverage. USTR duly followed up with this guidance:
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.
So brace yourselves, importers, things are about to get even bumpier. If you haven’t already, it may be time to consider seeking exclusion of your Round 3-covered goods. The deadline is September 30. A similar process has been promised for Round 4.