CARGO ALERT – Ping Pong Trade – Round 3

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CARGO ALERT – Ping Pong Trade – Round 3

On Monday, September 17, 2018, the Trump administration announced that the United States will impose a 10 percent tariff on $200 billion worth of Chinese goods.  This means that roughly half of the goods that China sells to the U.S. will be affected by additional tariffs.

In July, the administration published a list of over 6,000 goods that would be subject to additional duties.  After six days of public hearings, the administration removed about 300 product lines from the list.  Items removed from the list include high chairs, smart watches, Bluetooth devices, bike helmets, and more.  Currently, there are about 5,745 products on the list including textiles, handbags, seafood, produce, and beauty products.

Top officials from China and the U.S. were scheduled to meet later this month in Washington for trade talks.  It is unclear if Beijing will agree to come to the U.S. after the new tariffs go into effect.

President Trump said in a statement released Monday, “China has had many opportunities to fully address our concerns… Once again, I urge China’s leaders to take swift action to end their country’s unfair trade practices.”  Trump also threatened additional duties on another $267 billion of Chinese imports if China takes any retaliatory action.  This would bring the total to $517 billion worth of goods—almost 100 percent of everything China sells to the United States.

The tariffs meant to punish China for alleged unfair trade practices will take effect September 24, 2018.  The tariffs are scheduled to increase to 25 percent on January 1st, if the U.S. and China don’t come to an agreement.

We encourage companies to watch for announcements in the next few days to ascertain whether their products are on the list of additional tariffs.  If your products are on the lists for additional duties, please contact our office immediately.

There are multiple ways a company may try to mitigate these tariffs as much as possible.  Companies may file a product exclusion request from the tariffs.  The process to file a product exclusion includes: explaining how and why a particular product is critical to the U.S. economy and cannot be sourced in the U.S. or a third country, how the imposition of additional duties on the particular good would cause severe economic harm to the U.S. company or other U.S. interests, if the product is strategically relevant to “Made in China 2025,” etc.

Other options for reducing tariffs for companies may be tariff engineering (importing embellished or unfinished goods), country of origin (moving key operations from one country to another), valuation (first sale), bonded facilities or duty drawback.

If you have any questions, please feel free to contact Robert Krieger or your Norman Krieger Representative for more information.