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August 21, 2018

Additional Updates on China Tariffs

By: Mike Wilson

The trade dispute between the U.S. and China continues to escalate, as the U.S. Trade Representative (USTR) recently finalized the second list of Harmonized Tariff Schedule (HTS) codes that will now be subject to an additional 25% duty rate as part of the USTR’s investigation under Section 301 of the Trade Act of 1974, which authorizes the imposition of trade sanctions on foreign countries that engage in unfair trade practices.  CBP has announced that it will begin collecting these new tariffs starting on August 23, 2018.

The Section 301 investigation previously found that China was engaging in unfair trade practices that may be harming U.S. intellectual property rights, innovation and technology development.  This second tranche of goods that will be subject to the Section 301 duties covers an estimated $16 billion in Chinese imports, which brings the total amount of impacted Chinese imports up to $50 billion annually.  The new list includes plastics, machinery, chemicals and other industrial items that would benefit from the “Made in China 2025” industrial plan designed to make China competitive in technology-related industries. 
The Chinese Ministry of Commerce announced that it would assess its own 25% duty on its own list of tariff codes covering approximately $16 billion in U.S. imports.  These duties will also take effect on August 23, 2018.

The USTR also recently announced that it has extended the public comment period on its third list of tariff codes, covering approximately $200 billion in Chinese imports, that previously were being considered for an additional 10% duty.  The Trump Administration asked the USTR to consider raising the additional duty to 25%, and in response the USTR extended public comment on the third tranche of goods to accept feedback on this proposed increase.  The comment period has been extended to September 6, 2018.