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What Do You Need to Know About Tariffs on Chinese Goods?

Article
5 minute read
September 17, 2019

Trade tensions between the United States and China have led to a series of tariff increases and tariff threats by both countries since July 2018. The United States implemented its latest round of tariff increases on Chinese imports on September 1, 2019, when additional tariffs of 15% on approximately $125 billion of Chinese imports took effect. Further U.S. tariff increases are planned for October and December 2019 amid ongoing trade negotiations. If the scheduled increases take effect, tariffs will cover virtually all of the approximately $550 billion in annual imports from China, leading to increased costs for U.S. companies and consumers.

What goods are affected?

There are four lists of products affected, in addition to the tariffs previously imposed on solar panels, washing machines, and steel and aluminum. Initial tariffs (Lists 1 and 2) took effect in July and September 2018 and covered products ranging from industrial goods to electronic components. List 3 products, which had an additional 10% tariff imposed in September 2018, includes such items as chemicals, building materials, furniture, and consumer electronics. After some back-and-forth, the tariff on those List 3 items was raised to 25% on June 15, 2019.

List 4, which would cover “essentially all” of the remaining $300 billion in imports from China, was divided into two subgroups, with tariffs on List 4A scheduled for September 1, 2019, and List 4B for December 15, 2019, late enough not to affect U.S. holiday shopping in 2019. The tariff on both groups is currently set to be 15%.

Note: President Trump announced on November 13, 2019, that the United States will reduce the List 4A tariffs to 7.5%.

What’s next?

Right now, these are the scheduled increases:

Note: The tariffs scheduled to take effect on October 15 and on December 15 have been suspended indefinitely

What should my company be doing?

Firms can request to have a product excluded from the tariff list. While the deadlines for submitting exclusions requests for items from List 1 and List 2 have passed, the U.S. Trade Representative, or USTR, is accepting exclusion requests for List 3 until September 30, 2019. (The exclusion request process for List 4 items has not been announced.) The USTR continues to review exclusion requests for Lists 1-3 and periodically announces the exclusions through Federal Register notices. Firms can request a refund on tariffs paid on products subsequently excluded from the tariff list.

Next, be aware that U.S.–China negotiations are scheduled to resume in October. The results could go either way, so you’ll have to watch the news and stay flexible. If you’re affected by these tariffs, here are some steps you should be taking:

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© 2019