US – China Trade Updates – No Additional Tariffs (for now)
Trump Revives China Talks With Tariffs Truce, Break for Huawei
Excerpted from finance.yahoo.com
The U.S. and China declared a truce in their trade war on Saturday, as Donald Trump said he would hold off imposing an additional $300 billion in tariffs and the world’s two largest economies agreed to resume negotiations.
After a high-stakes meeting with Chinese President Xi Jinping, Trump told reporters on Saturday that he also would delay restrictions against Huawei Technologies Co., letting U.S. companies resume sales to China’s largest telecommunications equipment maker. Trump later tweeted that his meeting with Xi was “far better than expected.”
Trump outlined the deal at the end of the Group of 20 summit in Osaka, Japan, before heading to Seoul. The White House released no details about the arrangement worked out by the two leaders. The president’s comments may remove an immediate threat from a trade war looming over the global economy even as a lasting peace remains elusive.
After Trump and Xi met at the G-20, the two governments plan to restart trade talks that broke down last month. As part of the arrangement, the president said Xi promised to buy “tremendous” amounts of U.S. agricultural products, but Chinese official media reports said only that Trump hopes China will import more American goods as part of the truce.
The existing U.S. tariffs on Chinese products will remain unchanged, Trump tweeted on Sunday from Seoul, his next stop for meetings with South Korean President Moon Jae-In.
The decision to ease up on tariffs comes less than two weeks after he formally began his 2020 re-election bid, focusing on a strong U.S. economy and his tough stance with the rest of the world. At his June 18 campaign event in Florida, Trump said tough U.S. measures were adding billions to the Treasury and prompting companies to leave China to avoid the fees.
Winners and losers in Trump’s big China trade announcement
Excerpted from washingtonpost.com, by Heather Long
President Trump cooled off his trade war with China this weekend, announcing he would hold off imposing more tariffs. Many businesses are cheering the move, which happened Saturday morning in Japan (Friday night in the United States) on the sidelines of the Group of 20 meeting of world leaders..
Trump and Chinese President Xi Jinping agreed to keep talking, reviving hopes of a deal soon.
Many expected a restart in trade talks, which collapsed two months ago, leading Trump to increase tariffs on the Chinese and pursue sanctions on the Chinese tech behemoth Huawei. But China got almost all of what it wanted from this meeting: Trump agreed to hold off on more tariffs, and he made some concessions regarding Huawei. In exchange, Trump said, Xi agreed to buy more U.S. farm products.
It’s too soon to tell whether the fragile truce will hold
G20 summit: Trump and Xi agree to restart US-China trade talks
Excerpted from bbc.com
The US and China have agreed to resume trade talks, easing a long row that has contributed to a global economic slowdown.
US President Donald Trump and China’s President Xi Jinping reached agreement at the G20 summit in Japan.
Mr Trump also said he would allow US companies to continue to sell to the Chinese tech giant Huawei, in a move seen as a significant concession.
Mr Trump had threatened additional trade sanctions on China.
However, after the meeting on the sidelines of the main G20 summit in Osaka, he confirmed that the US would not be adding tariffs on $300bn (£236bn) worth of Chinese imports.
A Challenge to Shippers Who Would Never Dream of Controlling the Insurance
Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protecting your investments by insuring your goods provides peace of mind.
Buying CIF: Who’s really responsible if your product is lost or damaged in transit? According to internationally accepted trade terms, referred to as Incoterms, suppliers selling “CIF” (Cost, Insurance, Freight) are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to EXW, FOB, FCA, CFR or similar terms in order to control the selection, and thereby the quality, of insurance coverage.
How much is that insurance really costing you? Foreign suppliers and their forwarding agents often tack on placement fees to the insurance costs. Those added fees often inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from BOC International.
Is the coverage your supplier purchased for you adequate? Importers relying on their suppliers to arrange insurance run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask your supplier for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions
What’s the financial health of your supplier’s insurance company? Recent financial and catastrophic events have exposed the vulnerability of insurance companies to sudden economic devastation. Importers are encouraged to make certain their suppliers use insurers with a favorable financial rating supplied by a respected financial rating service. A.M. Best, Standard & Poor’s and Moody’s are among some of the world’s most respected. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).
How will your claim be handled? If insurance is arranged overseas, will you be forced to deal with an inexperienced, sub-contracted independent adjuster unfamiliar with the assessment of transportation related losses? Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.
Every Shipper Needs Cargo Insurance
Global trading involves risk; however, broad insurance coverage minimizes your financial risk. Don’t leave your livelihood up to chance! Statistics show that one ship sinks each day and you will experience a General Average loss every eight years. If you are depending on the carrier to cover losses, their responsibility is limited by law as follows:
Ocean Carriers $500 per shipping unit
A shipping unit may be defined as one ocean container.
Air Carriers $9.07 per pound
Truckers $.50 per pound
The insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative at 617-345-0050 for your free quote.
Are you familiar with GENERAL AVERAGE?
2019, year to date, there are a number of notable fire cases, with many resulting in General Average!
- Sincerity Ace – January 2019
- Maersk Honam – March 2018
- Maersk Kensington – March 2018
- Barcelona Ferry Excellent – October 2018
- Hyundai Auto Banner – May 2018
- MOL Prestige – February 2018
- Caribbean Fantasy – June 2018
Yantian Express
Year built 2002, 100,003 dwt
Date of loss: 1/3/19
Part loaded with 4,000 teu
(capacity 7,551 teu.)
198 total loss, 462 damaged required survey
LOF salvage – security 32.5%
GA – security estimate 28%
APL Vancouver
Year built 2013, 115,060 dwt
Date of loss: 1/31/19
Part loaded with
(capacity 9,200 teu.)
947 containers affected
LOF salvage – security 15-20%
GA – security
ER KOBE
Year built 2001, 68,196 dwt
Date of loss: 2/24/19
GA declaration on
March 12, 2019
NO SEPARATE
SALVAGE CLAIM
GA – security estimate 10%
General Average – The Concept
- Formulated by the Ancient Greeks to deal with situations where cargo has been jettisoned.
- Basic principle – that which has been sacrificed for the benefit of all shall be made good by the contribution of all.
- Applies to maritime claims only.
- Is declared by the captain when there is imminent danger to the vessel, voyage or crew.
- You are contractually obligated, via the Bill of Lading, for unknown and undetermined costs.
How does it work?
- Value of the voyage is determined (vessel value plus value of all cargo on the vessel.)
- Participation is determined by the percentage that the value of your cargo bears to the overall value of the voyage.
- The loss amount is determined, and participation percentage is applied to the loss amount to determine security deposit.
- Shipper or their cargo insurer pay twice – first for the initial contribution, then for a bond covering future adjustments to that estimate.
Hidden Costs
- The great unknown (is my cargo OK?); delays – finding a port, unloading & sorting; has my shipment missed deadlines?
- LCL Freight – has everyone in my container paid? Freight is not released until all payments received.
Difficulties of preventing and extinguishing fires on the open sea, include:
- Ships are larger with more varied cargo.
- Crew are ill equipped to deal with these fires.
- Fire-fighting tugs are often days or weeks away.
- Prevention is difficult, with rising problems with mis-declared cargo.
- IMDG Code is evolving to impose stricter rules on dangerous goods (DG.)
Problems Facing the Industry
- Stricter rules on DG will lead to higher costs and more incentive on the part of shippers to avoid proper declarations
- Ship owners and shipbuilders need to improve fire-fighting capabilities with CO² systems being shown to be inadequate – cost benefit analysis – are potential losses greater than the prevention costs?
- National Cargo Bureau in NY found in 2017 that of 1,721 stowage plans inspected, 20% showed errors with DG
General Average will never go away, so how do we make that less painful?
- Awareness across all business units that losses & delays are part of any supply chain. Mission-critical shipments need more risk analysis to determine transport mode.
- Understanding of what to do when General Average occurs. This is best led by your cargo insurance provider meeting with your ‘team,’ not just the risk manager or CFO.
When was the last time your insurance provider did this for you?
Do they know how to handle a GA claim?
- Have a contingency plan or at least an understanding of how the event will unfold.
U.S., Mexico Reach Deal to Avoid Tariffs
By Rebecca Ballhaus, Josh Zumbrun and Robbie Whelan, updated June 8, 2019 11:13 a.m. ET, excerpted from WSJ.com
President Trump says Mexico has agreed to take ‘strong measures’ to slow migration over border. President Trump dropped his threat of tariffs on billions of dollars of Mexican imports after negotiators reached a deal on measures to stem the flow of migrants pouring into the U.S. from Mexico, averting a potentially devastating trade fight for both countries.
Trump: U.S., Mexico Reach Deal To Avoid New Tariffs
June 7, 20198:48 PM ET, excerpted from NPR.org, updated Saturday at 10:30 a.m. ET
A day after U.S. and Mexico officials announced an agreement to avert tariffs — set to begin on Monday — affecting billions of dollars in imports from Mexico, President Trump took a victory lap on Twitter.
I would like to thank the President of Mexico, Andres Manuel Lopez Obrador, and his foreign minister, Marcelo Ebrard, together with all of the many representatives of both the United States and Mexico, for working so long and hard to get our agreement on immigration completed!
— Donald J. Trump (@realDonaldTrump) June 8, 2019
Under a joint agreement released by State Department officials, Mexico will assist the United States in curbing migration across the border by deploying its national guard troops through the country, especially its southern border.
Turkey Eliminated from Generalized System of Preferences (GSP)
The Federal Register has published the official notification that the designation of Turkey as a beneficiary developing country is terminated, effective May 17, 2019.
Please see the link, below, and the attached PDF for the full language.
The BOC Blast 314 5-21-2019 Turkey Terminated from Generalized System of Preferences – GSP Federal Register PDF
https://www.federalregister.gov/documents/2019/05/21/2019-10761/to-modify-the-list-of-beneficiary-developing-countries-under-the-trade-act-of-1974
List 4 Proposed Tariffs Published
On May 13, 2019 the USTR proposed a 25% tariff on a fourth listing of products. This listing, estimated at $300 billion in trade value, will cover almost all remaining import products from China including textiles, shoes, and many of the “other” classifications that had not been included previously.
The due date for written comments is June 17th, with public hearings scheduled for the same day. There is no proposed effective date for the new tariffs in the publication.
Please go to the following link for full Office of the US Trade Rep posting:
https://ustr.gov/sites/default/files/enforcement/301Investigations/May_2019_Proposed_Modification.pdf
British Columbia longshore workers move closer to strike
Nate Tabak, Canada Correspondent | www.freightwaves.com
ILWU members vote to authorize walk-outs “if necessary,” threatening to disrupt operations at Canada’s largest port, Vancouver.
The Port of Vancouver handles the largest volume of cargo in Canada. Photo: Vancouver Fraser Port Authority/Colin Jewell Photography
Longshore workers in British Columbia overwhelmingly voted to authorize a strike, raising the specter of a disruption at the Port of Vancouver, Canada’s busiest port.
The International Longshore and Warehouse Union (ILWU) Canada announced on May 10 that 98.4 percent of local members voted “in favor of supporting strike action if necessary.” A work stoppage could come at any time during the next 60 days, with 72 hours notice.
It significantly raises the stakes in contract negotiations between ILWU Canada and the British Columbia Maritime Employers’ Association (BCMEA), which represents companies operating at the ports. A contract for the longshore workers expired in March 2018.
The ILWU and the BCMEA agreed on their previous contract in 2010 after the longshoremen authorized a strike.
About 2,700 ILWU longshoremen work at British Columbia’s ports, which handled 3.6 million 20-foot-equivalent units (TEUs) of cargo in 2018. Most went to Vancouver, whose volumes hit a record 3.4 million TEUs and 147 million metric tons in 2018.
A federal mediator has been attempting to bring get the two sides to reach an agreement. Neither the union or BCMEA has disclosed their areas of contention.
The average unionized longshore worker earned about C$119,000 per year in 2018 (a Canadian dollar equals US$0.75), according to the BCMEA. Their pay lags behind longshore workers at major U.S. ports on the West Coast, who earned about US$171,000 per year on average in 2018, according to the Pacific Maritime Association.
About C$200 billion in trade goes through the Port of Vancouver each year, and it serves as Canada’s main gateway for Asia.
The Canadian International Freight Forwarders Association warned in April that a strike would hurt Canada’s supply chain, and could result in cargo permanently being redirected to ports in the U.S.
Nate Tabak, Canada Correspondent
Nate Tabak is a journalist, editor and producer in Toronto. He covers Canada for FreightWaves, with a keen interest on the cross-border economic relationship with the United States. Nate spent seven years working as an investigative editor and reporter based in Kosovo. He covered everything from corruption to the country’s emerging wine industry. He also reported across the Balkans and investigated Albania’s multibillion-dollar marijuana industry with a grant from the Pulitzer Center on Crisis Reporting. Nate grew up in Berkeley, Calif. He enjoys exploring Toronto with his wife and is always looking forward to his next meal.
[Billing Code 3290-F9]
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Implementing Modification to Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of implementing modification.
SUMMARY: In a notice published on May 9, 2019 (May 9 Notice), the U.S. Trade Representative (Trade Representative) increased the rate of additional duty from 10 percent to 25 percent for the products of China covered by the September 2018 action that are (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019. This notice provides that products of China that are covered by the September 2018 action and that were exported to the United States prior to May 10, 2019, are not subject to the additional duty of 25 percent, as long as such products are entered into the United States prior to June 1, 2019. Such products remain subject to the additional duty of 10 percent for this interim period.
DATES: HTSUS heading 9903.88.09, which is set out in the Annex to this notice, applies to products of China covered by the September 2018 action that were exported before May 10, 2019, and entered into the United States on or after May 10, 2019, and before June 1, 2019.
FOR FURTHER INFORMATION CONTACT: For questions about this notice, contact Associate General Counsel Arthur Tsao or Assistant General Counsel Juli Schwartz, or Director of Industrial Goods Justin Hoffmann at (202) 395-5725. For questions on customs classification or implementation of additional duties on products covered in the supplemental action, contact traderemedy@cbp.dhs.gov.
SUPPLEMENTARY INFORMATION:
In the May 9 Notice, the Trade Representative modified the action being taken in the Section 301 investigation by increasing the rate of additional duty from 10 percent to 25 percent for the products of China covered by the September 2018 action in this investigation. The “September 2018 action” refers to the additional duties on products of China with an annual trade value of approximately $200 billion, published at 83 FR 47974 (Sep. 21, 2018), as subsequently modified by the notice published at 83 FR 49153 (September 28, 2018). The increase in the rate of additional duty became effective on May 10, 2019.
Under this implementing modification, and as specified in the Annex to this notice, products of China that are covered by the September 2018 action that were exported prior to May 10, 2019, are not subject to the additional duty of 25 percent as long as such products are entered into the United States prior to June 1, 2019. Such products remain subject to the additional duty of 10 percent for a transitional period of time before June 1, 2019. The covered products of China that are entered into the United States on or after June 1, 2019, are subject to the 25 percent rate of additional duty.
To distinguish between covered products of China subject to the 10 percent rate of additional duty from those subject to the 25 percent rate, the Annex to this notice creates a new heading in Chapter 99 of the HTSUS (9903.88.09) for products of China covered by the September 2018 action that were exported before May 10, 2019, and entered into the United States on or after May 10, 2019 and before June 1, 2019. HTSUS heading 9903.88.09 is limited to covered products of China entered into the United States during this period of time to account for customs enforcement factors and the average transit time between China and the United States by sea.
The products of China covered by the September 2018 action that are admitted into a foreign-trade zone (FTZ) in “Privileged Foreign” status shall retain that status consistent with 19 CFR 146.41(e) and will be subject, at the time of entry for consumption, to the additional duty rate that was in effect at the time of FTZ admission of said product.
U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.
Joseph Barloon
General Counsel
Office of the U.S. Trade Representative.
ANNEX
Effective with respect to goods: (1) exported to the United States before May 10, 2019; and (2) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and entered for consumption, or withdrawn from warehouse for consumption, before 12:01 a.m. eastern daylight time on June 1, 2019, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS) is modified:
- by inserting the following new heading 9903.88.09 in numerical sequence, with the material in the new heading inserted in the columns of the HTSUS labeled “Heading/Subheading”, “Article Description”, and “Rates of Duty 1-General”, respectively:
| Heading/ Subheading | Article Description |
Rates of Duty | ||
| 1 | 2 | |||
| General | Special | |||
| “9903.88.09 | Articles the product of China, as provided for in U.S. note 20(l) to this subchapter and as provided for in the subheadings enumerated in U.S. notes 20(f) or 20(g) to this subchapter, if exported to the United States before May 10, 2019 and entered for consumption, or withdrawn from warehouse for consumption, on or after May 10, 2019, and before June 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | The duty provided in the applicable subheading + 10%” |
||
- by inserting the following new U.S. note 20(l) to subchapter III of chapter 99 in numerical sequence:
“(l) For the purposes of heading 9903.88.09, products of China, as provided for in this note, shall be subject to an additional 10 percent ad valorem rate of duty. The products of China that are subject to an additional 10 percent ad valorem rate of duty under heading 9903.88.09 are products of China that are classified in the subheadings enumerated in U.S. notes 20(f) or 20(g) to subchapter III. All products of China that are classified in the subheadings enumerated in U.S. notes 20(f) or 20(g) to subchapter III are subject to the additional 10 percent ad valorem rate of duty imposed by heading 9903.88.09.
For the purposes of heading 9903.88.09, the products of China that are subject to an additional 10 percent ad valorem rate of duty are products that are: (1) exported to the United States before May 10, 2019; and (2) entered for consumption, or withdrawn from warehouse for consumption on or after May 10, 2019, and before June 1, 2019.
Notwithstanding U.S. note 1 to this subchapter, all products of China that are subject to the additional 10 percent ad valorem rate of duty imposed by heading 9903.88.09 shall also be subject to the general rates of duty imposed on products of China classified in the subheadings enumerated in U.S. notes 20(f) or 20(g) to subchapter III.
Products of China that are classified in the subheadings enumerated in U.S. note 20(f) or 20(g) to subchapter III and that are eligible for special tariff treatment under general note 3(c)(i) to the tariff schedule, or that are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99, shall be subject to the additional 10 percent ad valorem rate of duty imposed by heading 9903.88.09.
The additional duties imposed by heading 9903.88.09 do not apply to goods for which entry is properly claimed under a provision of chapter 98 of the HTSUS, except for goods entered under subheadings 9802.00.40, 9802.00.50, and 9802.00.60, and heading 9802.00.80. For subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional duties apply to the value of repairs, alterations, or processing performed abroad, as described in the applicable subheading. For heading 9802.00.80, the additional duties apply to the value of the article less the cost or value of such products of the United States, as described in heading 9802.00.80.
Products of China that are provided for in heading 9903.88.09 and classified in one of the subheadings enumerated in U.S. notes 20(f) or 20(g) to subchapter III shall continue to be subject to antidumping, countervailing, or other duties, fees, exactions and charges that apply to such products, as well as to the additional 10 percent ad valorem rate of duty imposed by heading 9903.88.09.”
 This document is scheduled to be published in the Federal Register on 05/09/2019 and available online at https://federalregister.gov/d/2019-09681, and on govinfo.gov |
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of modification of action.
SUMMARY: In accordance with the direction of the President, the U.S. Trade Representative (Trade Representative) has determined to modify the action being taken in this Section 301 investigation by increasing the rate of additional duty from 10 percent to 25 percent for the products of China covered by the September 2018 action in this investigation. The Trade Representative has further determined to establish a process by which interested persons may request that particular products classified within a tariff subheading covered by the September 2018 action be excluded from the additional
duties.
DATES: The rate of additional duty will increase to 25 percent with respect to products covered by the September 2018 action on May 10, 2019.
FOR FURTHER INFORMATION CONTACT: For questions about this notice, contact Associate General Counsel Arthur Tsao, Assistant General Counsel Philip Butler, or Director of Industrial Goods Justin Hoffmann at (202) 395–5725. For questions on customs classification or implementation of additional duties on products covered by the September 2018 action, contact traderemedy@cbp.dhs.gov.
SUPPLEMENTARY INFORMATION:
- September 2018 Action
For background on the proceedings in this investigation, please see the prior notices issued in the investigation, including 82 FR 40213 (August 23, 2017), 83 FR 14906 (April 6, 2018), 83 FR 28710 (June 20, 2018), 83 FR 33608 (July 17, 2018), 83 FR 38760 (August 7, 2018), and 83 FR 40823 (August 16, 2018).
In a notice published on September 21, 2018 (83 FR 47974), the Trade Representative, at the direction of the President, announced a determination to modify the action being taken in the investigation by imposing additional duties on products of China with an annual trade value of approximately $200 billion. The rate of additional duty initially was 10 percent. Those additional duties were effective starting on September 24, 2018, and currently are in effect. Under Annex B of the September 21 notice, the rate of additional duty was set to increase to 25 percent on January 1, 2019. In the September 21 notice, the Trade Representative stated that he would continue to consider the actions taken in this investigation, and if further modifications were appropriate, he would take into account the extensive public comments and testimony previously provided in response to the notices published on July 17, 2018 (83 FR 33608) and August 7, 2018 (83 FR 38760).
On September 28, 2018 (83 FR 49153), the Trade Representative issued a conforming amendment and modification of the September 21 notice. The current notice refers to the September 21 notice, as modified by the September 28 notice, as the ‘September 2018 action.’
On December 19, 2018 (83 FR 65198), in accordance with the direction of the President, the Trade Representative determined to modify the September 2018 action by postponing until March 2, 2019, the increase in the rate of additional duty to 25 percent.
The Annex to the December 19 notice, which superseded Annex B to the September 21 notice, amended the Harmonized Tariff Schedule of the United States (HTSUS) to reflect this postponement of the increase in the rate of duty applicable to the September 2018 action.
On March 5, 2019 (84 FR 7699), in accordance with the direction of the President, the Trade Representative determined to modify the September 2018 action by postponing until further notice the increase in the rate of additional duty to 25 percent.
Annex B of the September 21 notice (83 FR 47974) and the Annex to the December 19 notice (83 FR 65198) were rescinded. In accordance with Annex A of the September 21 notice, the rate of additional duty under the September 2018 action remained at 10 percent until further notice.
- Determination to Further Modify September 2018 Action
The United States is engaging with China with the goal of obtaining the elimination of the acts, policies, and practices covered in the investigation. The leaders of the United States and China met on December 1, 2018, and agreed to hold negotiations on a range of issues, including those covered in this Section 301 investigation.
See https://www.whitehouse.gov/briefings-statements/statement-press-secretary-regarding- presidents-working-dinner-china/. Since the meeting on December 1, the United States and China have engaged in additional rounds of negotiation on these issues, including meetings in March, April, and May of 2019. In the most recent negotiations, China has chosen to retreat from specific commitments agreed to in earlier rounds. In light of the lack of progress in discussions with China, the President has directed the Trade Representative to increase the rate of additional duty to 25 percent.
Section 301(b) of the Trade Act of 1974, as amended (Trade Act), provides that the Trade Representative “shall take all appropriate and feasible action authorized under [Section 301(c)] to obtain the elimination of [the] act, policy, or practice [under investigation].” Section 307(a)(1) of the Trade Act authorizes the Trade Representative to modify or terminate any action being taken under Section 301, subject to the specific direction, if any, of the President if “the burden or restriction on United States commerce . . . of the acts, policies, and practices, that are the subject of such action has increased or decreased, or such action is being taken under Section [301(b)] of this title and is no longer appropriate.” In light of the lack of progress in the additional rounds of negotiations since March 2019, and at the direction of the President, the Trade Representative has determined that it is appropriate for the rate of additional duty under the September 2018 action to increase to 25 percent on May 10, 2019.
The Trade Representative’s decision to modify the September 2018 action takes into account the extensive public comments and testimony, as well as advice from advisory committees, concerning the actions proposed in the notices issued in advance of the September 2018 action (83 FR 33608 and 83 FR 38760). Those notices, among other things, requested comments on whether the rate of additional duties should be 10 percent or 25 percent. The Trade Representative’s decision also reflects the advice of the interagency Section 301 Committee.
The Annex to this notice amends the Harmonized Tariff Schedule of the United States to provide that the rate of additional duties for the September 2018 action will increase to 25 percent on May 10, 2019.
Pursuant to Sections 301(b), 301(c), 304(a), and 307(a) of the Trade Act, the Trade Representative has determined that the Office of the United States Trade Representative (USTR) will establish a process by which interested persons may request that particular products classified within an HTSUS subheading covered by the September 2018 action be excluded from the additional duties. USTR will publish a separate notice describing the product exclusion process, including the procedures for submitting exclusion requests, and an opportunity for interested persons to submit oppositions to a request.
ANNEX
Effective with respect to goods (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States is modified:
- by amending U.S. Note 20(e) to subchapter III of chapter 99 by deleting “10 percent” each place that it appears, and inserting “25 percent” in lieu thereof;
- by amending U.S. Note 20(g) to subchapter III of chapter 99 by deleting “10 percent” each place that it appears, and inserting “25 percent” in lieu thereof;
- by amending the Rates of Duty 1-General column of heading 9903.88.03 by deleting “10%”, and inserting “25%” in lieu thereof; and
- by amending the Rates of Duty 1-General column of heading 9903.88.04 by deleting “10%”, and inserting “25%” in lieu thereof.
Joseph Barloon
General Counsel
Office of the U.S. Trade Representative.
Certain China Duties to Increase Friday May 10, 2019
Although nothing official has been issued by the government, President Trump announced yesterday that effective Friday, May 10, the tariffs for products covered by List 3 of the Section 301 program will increase from 10% to 25%. This is a result of what appears to be stalled negotiation talks with China, although it appears that the Chinese delegation will come to Washington for continued talks this week.
In addition, he has threatened to impose the 25% tariffs on all products from China.
As many may recall, these duties were to be implemented in March. However, President Trump issued an executive order stating that implementation was delayed until further notice. The two countries have been working on a trade agreement to address China’s unfair trade practices.
Additionally, last Friday US Trade Representative Lighthizer announced that his office is in the process of establishing an exclusion process for goods on List 3. According to his statement, the office hopes to have the process in place by the end of May. It appears at this time the process will be allowed for the products whether or not the tariffs increase to 25%.
Potential options for avoiding or reducing the increased tariff, include the following:
- Tariff Classification – although many companies have reviewed this with the previous two lists, verifying the classification should still be considered as a potential option.
- Country of origin – companies should look closely at the supply chain. It may be time to consider sourcing products elsewhere. However, careful consideration should be given to making moves to a third country, particularly if your China supplier is involved and/or there would be China content included in the product. Companies need to ensure that the product is being substantially transformed in the third party country.
- Use of Chapter 98 provisions, duty drawback, bonded warehouses and Foreign Trade Zones also provide options in certain situations, particularly if products will be later exported from the U.S.
- Value strategies – companies can consider legitimate means of lowering the transaction value. Options include potential discounts, and use of the “first sale” rule if there is a multi-tiered transaction involving a middleman.
- Exclusion Requests – Exclusion requests may be granted when a company can substantiate to the government that the product in question cannot be sourced in the U.S. or third party countries, there would be severe economic hardship to the requestor or other US interests and the product is not part of the “Made in China 2025” or other industrial programs.
It appears that talks between the two countries scheduled for this Wednesday will continue and hopefully the announced increase will not take place.
If you have questions, please contact your BOC Representative, or Paula Connelly, Esq.
Information for this BOC Blast provided by The Law Offices of Paula M. Connelly