As instructed by President Trump, the U.S. Trade Representative (“USTR”) has just ordered a 25% ad valorem (according to the value of the article) tariff increase on hundreds of products coming from China. It is an increase, so if the previous tariff on a particular product was 5%, the new tariff will be 30%. The new tariffs are intended to target Chinese products in the aerospace, automobile, IT, communications, robotics, and industrial machine industries (under Harmonized Tariff Schedule of the United States (“HTSUS”) chapters 39 and 84-90, and a few odds and ends from other chapters).
For 818 tariff categories, the tariff will be imposed on entries made, or warehouse withdrawals for consumption, on or after 12:01 a.m. EDT on Friday, July 6, 2018. That list of categories is available here. In addition, 284 more tariff categories are proposed to be subject to the 25% tariff increase, following further public comment. There is not yet an effective date for any tariff increase on these additional categories, a list of which is found here. In the coming weeks, the USTR promises to put forth a procedure for U.S. importers to request exclusions from the 25% increase.
The tariff increase is imposed pursuant to the USTR’s authority under Section 301 of the amended Trade Act of 1974 at 19 U.S.C. § 2411. That law allows the USTR to impose additional tariffs if an inquiry reveals that the trade practices of another country negates the United States’ benefits under a trade agreement, or unjustifiably obstructs commerce. Previously, the USTR “determined that numerous acts, policies, and practices of the government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory, and burden or restrict U.S. commerce.” Office of the USTR Section 301 Investigation Fact Sheet, available here.
The USTR anticipates that the new tariffs will impact approximately $50 billion worth of Chinese goods over a one-year period. We note that, according to the U.S. Bureau of Economic Analysis (“BEA”), the United States’ current trade deficit with China of goods and services is running at about $30 billion per month. BEA’s April figures are available here.
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