Round 3: Latest tariffs on Chinese goods hit Monday

Date: Tuesday, September 18th, 2018
Source: American Shipper

The Office of the U.S. Trade Representative announced that a third tranche of Section 301 tariffs covering approximately $200 billion worth of Chinese-origin goods will start next Monday.

USTR will impose 10 percent tariffs until Jan. 1, when they will increase to 25 percent, the agency said Monday.

USTR fully or partially removed 297 tariff lines from an original list of 6,031 tariff lines disseminated on July 10.

The third list of Section 301 tariffs will affect $200 billion worth of Chinese-origin goods in 2017 import value, after a first round covering $34 billion worth of Chinese goods was activated July 6 and a second round covering $16 billion was activated Aug. 23.

Business groups reacted against the announcement, with the U.S. Chamber of Commerce, the U.S. Fashion Industry Association, the American Apparel and Footwear Association (AAFA) and the National Association of Manufacturers (NAM) among those expressing concern.

Even though the goods dropped from the original tariff list included certain textiles, the list still includes textile products like backpacks, handbags, purses, wallets, baseball gloves and hats, and the action is “cruel to U.S. interests,” particularly because companies are getting only one week’s notice before the tariffs take effect and because the tariffs will automatically increase to 25 percent on Jan. 1, AAFA said.

“Over the last year, manufacturers have delivered for our communities and our people, raising wages, building new plants and creating new jobs thanks to game-changing tax and regulatory reform,” NAM CEO Jay Timmons said in a statement. “But more U.S. tariffs and Chinese retaliation risk undoing that progress and moving our economy in the wrong direction.”
Products dropped from USTR’s original list include certain consumer electronics such as smart watches and Bluetooth devices; certain chemical inputs for manufactured goods, textiles and agriculture; certain health and safety products like bicycle helmets; and child safety furniture such as car seats and playpens, USTR said.
Following USTR’s announcement Monday, the Chinese Ministry of Commerce (MOFCOM) announced it would retaliate to the tune of 5 percent to 10 percent tariffs across $60 billion worth of U.S. goods, starting the same day as the United States’ third round of Section 301 tariffs, according to a translation of the MOFCOM announcement.
Accusing the U.S. of unilateralism and protectionism, China said it is retaliating in an effort to ultimately reduce bilateral trade friction and that it hopes to work with the United States in a pragmatic way to soothe ongoing trade tensions.

A senior Trump administration official told reporters on Monday that China still hasn’t seriously engaged with the U.S. to allay the executive branch’s concerns about its unfair trading practices, including forced technology transfer.

“There have been conversations about a team from China potentially coming to the United States,” the official said. “President Trump has been clear all along, ever since the 301 action was started, that he has a good relationship with [Chinese] President Xi [Jinping] and he hopes we can work these problems out, and that has not changed. But unfortunately … despite numerous conversations where we have been entirely clear with China what is needed to put this relationship on a different trajectory, what is needed to fix these problems, they have not yet seriously engaged with that.”

Speaking during the National Association of Foreign-Trade Zones (NAFTZ) annual conference in Atlanta, Rebecca Williams, managing director of Rockefeller Group Foreign Trade Zone Services, said the Trump administration in its two previous official Section 301 tariff proclamations omitted language included in Section 232 and Section 201 tariff proclamations that exempts goods from trade remedy duties upon entry for consumption merely because of manufacture in a U.S. FTZ.

Based on the language of the first two Section 301 proclamations, duties could essentially be assessed on imported manufacturing inputs that are not themselves subject to the trade remedy because they omit the NAFTZ-requested language included in both the Section 232 and Section 201 tariff proclamations, Williams said.

“We remain hopeful” that the official Federal Register notice establishing the third round of Section 301 tariffs will include that language, Williams said, but “don’t bank on it.”

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