On Thursday, August 1st President Trump announced that on September 1, 2019, he will impose a 10% import tariff on $300 billion worth of Chinese goods (which may potentially rise to 25% in the future). These goods, known commonly as List 4, will include most products that are not already covered by the previous three lists of goods subject to Section 301 tariffs.
The President’s decision came after trade negotiations with China fell short once again. After the previously stalled talks to resolve the U.S.-China trade talks were restarted, China recently agreed to buy large amounts of agricultural products from the United States and cease the sale of fentanyl into the U.S. China, however, has not followed up on either of these actions. Additionally, Chinese representatives have generally been unwilling to reach a deal unless the U.S. agrees to remove the List 1, 2, and 3 tariffs.
What is Covered?
The U.S. Trade Representative (USTR) has not yet issued the final version of List 4.While interested parties had the opportunity to provide comments to and participate in hearings before the USTR on the inclusion or removal of particular subheadings included in the proposed version of List 4, we believe that the final version of List 4 will likely include most,
if not all, of the 3,805 full and partial subheadings on the proposed version of List 4 (although it is impossible to predict this with certainty at this time).
Moreover, as with List 3, we believe that while the USTR will likely establish a process to apply for exclusion from the List 4 tariffs, it is unlikely that this process will be set up until and unless the tariff is increased from 10% to 25%.
What does this mean for U.S. Companies?
While the final version of List 4 has not been released, importers of goods on proposed List 4 should consider accelerating shipments and trying to get as much product into the United States as possible prior to September 1st when the 10% tariff is imposed if they have not done so already.
While President Trump announced that the effective date of the tariffs will be September 1st, it is still unclear at this
time whether the effective date will be the date a shipment is exported from China, or instead will be the date that the shipment enters into the U.S. For now, and to be safe, importers should assume the September 1st effective date will be the date on which goods are exported from China. Clarification, however, will be provided once the USTR issues further instructions in the coming days. In any event, we recommend that importers review their shipments that are
arriving close to September 1st. In close situations, importers may want to discuss making entry at the port of first arrival. In addition, we recommend that, if possible, importers avoid voyages with multiple U.S. ports of discharge or arrange or scheduled entry for early U.S. ports of call.
Thus far, China has not retaliated to this most recent announcement with matching tariffs of their own. However, China said today that it would “take necessary countermeasures” to the List 4 tariffs. Such countermeasures could include retaliatory tariffs on U.S.-origin goods; they could also include non-tariff measures such as increased surprise
inspections on U.S. imports and increased rejections of U.S. applications for licenses which they have already been employing in connection with Lists 1, 2, and 3.
Trade negotiations are scheduled to continue again in September when another Chinese delegation is scheduled to arrive in Washington. However, the U.S. decision to impose tariffs on List 4 could delay or even scuttle these scheduled negotiations.
If your business is impacted by the tariffs on imports into the U.S., contact us to discuss your options with one of our affiliated Customs attorneys.
