On May 5, 2019, President Trump announced that the Section 301 tariff rate would increase from 10 percent to 25 percent for approximately $200 billion of Chinese imports.1 Following the president’s direction, the Office of the US Trade Representative (“USTR”) quickly published a notice in the Federal Register, confirming that the increase in tariff rate takes effect on May 10.2
US Customs and Border Protection clarifies that the increase will not apply to goods exported to the United States before May 10 but entered for consumption after that date. However, in order to retain the 10 percent rate in this situation, importers will need to follow certain special filing procedures yet to be announced. Before the announcement, importers either can pay the 25 percent duty first and then seek refund through the special procedures when they become available or can delay entering the goods until after the announcement.3
With the publication of the tariff increase, USTR confirms that it will establish a product exclusion process for US List 3 products and publish the details in a separate notice.4 The product exclusion process provides US stakeholders with another opportunity to be exempt from the Section 301 tariff—excluding specific products within a covered HTS code from the tariff.
Today’s tariff hike (which covers “US List 3” products) affects the largest group of Chinese imports on which additional tariffs have been imposed under Section 301 of the Trade Act of 1974 since July 2018. US Lists 1 and 2 affect approximately $34 billion and $16 billion of Chinese imports, respectively. While the ad valorem rate increase was announced with the original tariff, the administration twice extended the deadline for implementation, pending the trade negotiations with China.5 The current tariff increase followed after discussions between the two states reportedly encountered a significant setback last weekend, although trade negotiations continue this week in Washington.6
China announced that it will have to impose certain countermeasures in response to the US tariff increase7 but has yet to provide details.
1Donald J. Trump @realDonald Trump, Tweets available at https://twitter.com/realDonaldTrump/status/1125069835044573186 and https://twitter.com/realDonaldTrump/status/1125069836088950784.
2 Notice of Modification of Section 301 Action: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 FR 20459 (May 9, 2019) (“May 9 FR Notice”).
3 U.S. Customs and Border Protection, Change in Effective Date of Duty Increase of Section 301 (Tranche 3) Duties, CSMS #19-000236 (May 9, 2019), available at https://csms.cbp.gov/viewmssg.asp?Recid=24227&page=&srch_argv=19-000236&srchtype=all&btype=&sortby=&sby=.
5 Mayer Brown Legal Update, United States Delays Increase in Section 301 Tariff Rate on $200 Billion Chinese Imports, available at https://www.mayerbrown.com/en/perspectives-events/publications/2019/02/301.
6 New York Times, Trump Says China Tariffs Will Increase as Trade Deal Hangs in the Balance (May 9, 2019), available at https://www.nytimes.com/2019/05/09/us/politics/china-trade-tariffs.html.