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End-of-Summer Section 301 China Tariffs Roundup: New Tariffs, New Deadlines, New Uncertainty

List 4A goes into effect, all Section 301 tariffs to increase by 5 percent, USTR deadlines loom, and the President orders American companies to “search for alternatives” to China sourcing. This is your end-of-summer Section 301 China tariffs roundup.

Some List 4 Tariffs Take Effect at 15 Percent; Lists 1 through 3 Tariffs to Increase to 30 Percent

The weeks before Labor Day were marked by more uncertainty at home and tit-for-tat trade measures abroad. On August 20, 2019, USTR published (84 FR 43304) the fourth list of Chinese products to be subject to additional tariffs under Section 301 of the Trade Act of 1974. Following a series of public hearings, USTR dropped just 25 tariff lines from its proposed List 4, ordering that 3,780 full or partial tariff lines with an annual trade value of approximately $300 billion would be subject to an additional 10 percent duty.

List 4 is divided into two parts: List 4A, consisting of about $125 billion of goods where China’s share of global US imports is less than 75 percent, was scheduled for September 1, while List 4B is slated for December 15, with no allowance for good already in transit. List 4B includes cellphones, laptops, toys, and clothing. In announcing these tariffs, USTR has indicated an exclusion process will be established for all List 4 products, but the details of those procedures have not yet been made public.

On August 23, the day before the G7 was set to meet in France, the Chinese announced retaliatory tariffs of between 5 percent and 25 percent to take effect the same days on a total of $75 billion of US goods across 5,078 tariff lines. In response, the President indicated that the Administration would raise all Section 301 tariffs on Chinese goods by 5 percent.

USTR published (84 FR 45821) the increase on List 4 to 15 percent, without the benefit of a comment period, on Friday, August 30, and the List 4A tariffs became effective as planned at 12:01 A.M. on Sunday, September 1. The Chinese tariffs on US goods also took effect Sunday on 1,717 tariff lines, including crude oil, at 5 percent to 10 percent, with the remainder scheduled for December 15, the same date as List 4B. On September 3, USTR published (84 FR 46212) the proposal to increase tariffs on Lists 1 through 3 to 30 percent from 25 percent, effective October 1, soliciting comments on this action due by September 20 (see below).

The United States began to levy Section 301 tariffs in 2018 to eliminate certain Chinese government acts, policies, and practices related to technology transfer, intellectual property, and innovation it determined to be unreasonable and burdensome to US commerce pursuant to an investigation initiated at the President’s direction. Overall, the action now covers $550 billion of Chinese imports, nearly all save certain pharmaceuticals, medical devices, and minerals, in 10,622 full or partial tariff lines.

Negotiations, which have been ongoing for over a year, have had their ups and downs during that period, and the White House continues to send mixed signals on the trade war with China as evidenced even by statements made during the G7, where the President indicated he was having “second thoughts,” but press secretary Stephanie Grisham explained Trump’s comments to mean that “he regrets not raising the tariffs higher.” Talks between the parties are expected to continue later this month.

List 3 Exclusion Process Closes at the End of September

The deadline to submit requests for exclusions for products covered by List 3 is Monday, September 30. Arent Fox has previously discussed the List 3 exclusion process. To date, USTR has granted (84 FR 38717) one round of exclusions from List 3, covering kayaks, canoes, and other boats, wet wipes dispensers, and pet cages, among other items.

USTR Solicits Comments on 5 Percent Increase to Lists 1 through 3 by September 20

The proposal to raise tariffs on Lists 1 through 3 by 5 percent includes a request for public comments. The notice asks commenters to address specifically whether the increase “would be practicable or effective to obtain the elimination of China’s acts, policies, and practices” or “would cause disproportionate economic harm to US interests, including small- or medium-sized businesses and consumers”—similar to criteria for exclusion requests. Comments are due no later than Friday, September 20.

Additionally, for List 1, whether USTR will renew the exclusion process for exclusions granted that will soon expire is unclear. Certainly, the need for the exclusion process to continue while these tariffs are in place will be an appropriate topic for the comments being solicited by USTR.

Arent Fox has an experienced team in place to help companies submit both exclusion requests and public comments.

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