Announcement of Additional 10 Percent Tariff
On August 13, 2019, the United States Trade Representative (“USTR”) announced an additional 10 percent ad valorem duty on approximately $300 billion of Chinese imports.1 This announcement follows USTR’s notice on May 17, 2019, to begin the process to subject virtually all remaining imports from China to tariffs pursuant to Section 301 of the Trade Act of 1974 (the so-called “Tranche IV”).2
The new tariff will go into effect in two stages. The first stage is effective September 1, 2019, and will apply to a broad range of products, including a wide range of food items, certain electronics, steel and iron pipes, and certain clothing items. The complete list of products subject to the 10 percent tariff effective September 1 is available here (“List 4A”). The second stage is effective December 15, 2019, and will apply to consumer items such as cellphones, laptops, textile materials, certain toys and video game consoles. The complete list of products subject to the 10 percent tariff effective December 15 is available here (“List 4B”). Moreover, certain products will be removed from the list due to health, safety, national security and other factors and will not be subject to the Tranche IV tariff. Specifically, products exempt from the Tranche IV list fall under 25 tariff headings, which include items ranging from frozen fish and minerals to ocean shipping containers and child safety seats.
Exemption Process Forthcoming
According to its announcement, USTR intends to conduct an exclusion process for the products on List 4A and List 4B, which is consistent with its prior imposition of tariffs on Chinese imports pursuant to the Section 301 investigation on China. In this regard, USTR recently approved exemptions for certain Chinese imports subject to the 25 percent ad valorem duty on approximately $200 billion of Chinese imports (the so-called “Tranche III”). For example, on August 7, 2019, USTR published a notice of product exclusions for 10 products, which will apply as of the effective date of the Tranche III action (September 24, 2018) and will be in effect until August 7, 2020.3 To date, USTR has published eight notices approving exemptions for thousands of products under 403 tariff headings.4
Companies impacted by the Tranche IV tariffs should monitor developments related to the forthcoming product exclusion process in order to either (a) avail themselves of opportunities to avoid additional duties on their products, or (b) file comments objecting to certain exclusion requests. Moreover, parties considering changes to their supply chain should continue to consider the impact that such changes may have with respect to their compliance with US customs laws.
1 United States Trade Representative, USTR Announces Next Steps on Proposed 10 Percent Tariffs on Imports from China, available at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/august/ustr-announces-next-steps-proposed.
2 19 U.S.C. §§ 2411-2420. For additional details on USTR’s May 17, 2019, action, please see Mayer Brown Legal Update, US Prepares to Hit All Chinese Imports with Tariffs, as China Retaliates and Launches a Product Exclusion Process, available at https://www.mayerbrown.com/en/perspectives-events/publications/2019/05/us-prepares-to-hit-all-chinese-imports-with-tariffs-as-china-retaliates-and-launches-a-product-exclusion-process#_edn1.
3 United States Trade Representative, Notice of Product Exclusions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, available at https://www.federalregister.gov/documents/2019/08/07/2019-16886/notice-of-product-exclusions-chinas-acts-policies-and-practices-related-to-technology-transfer.
4 Details on these product exclusions can be found in the Federal Register, available athttps://www.federalregister.gov/agencies/trade-representative-office-of-united-states.