Importers should continue to plan for 25% from China on January 1, 2019

USTR clarifies Section 301 duties

Sometimes, there is news we wish we didn’t have to share, but this is one of those instances.

As all US importers buying from China are aware, the US determined that for national security reasons, select goods of Chinese origin were targeted for additional duties under a Section 301 investigation.

There have been three lists, or “annexes” published with proposed and adjudicated tariff numbers.

The first annex can be found here.

The second annex here.

The third and final annex, here.

The only difference in the three lists is that the first two were immediately subject to 25% additional duty above the duty rate published in the Harmonized Tariff. The third and most recent list has been subject to 10% duty, with an announced increase to 25% on January 1, 2019.

At the end of the President’s visit to Argentina for the G20 meetings, the US and China met for a working dinner. Coming out of that meeting, it appeared that the January 1st deadline was going to be postponed for ninety days to give both sides to work through some additional issues and perhaps find resolution to the disagreements. The US said that China committed to purchase agricultural and energy products, reduce the duty on cars and take up the issue of IPR enforcement and theft of secrets which caused the investigation in the first place.

However, two-plus weeks on from the dinner, there has neither been an announcement from the US Trade Representative, nor anything published in the Federal Register delaying the increase to 25%.

In the first days after the meeting, there was even confusion and disagreement among the US delegation back here in America about what had been agreed to. Coupled with the detaining of the CFO of Huawei, a major Chinese telecom in Canada over alleged Iran sanctions violations and the apparent retaliation by China against two Canadian citizens, any progress or promises made at the dinner are quickly fading from view.

While we continue to encourage importers to speak with their elected representatives about the impact is is having on the people who work and live in their respective districts, we are also advising that importers who thought relief was coming in the new year should be thinking otherwise. Further, they should keep their fingers crossed that the administration doesn’t move forward on threats to put duty on all Chinese imports.

We will continue to monitor developments through all of our resources and advise clients immediately if and when the delay is officially published. Until then, arrangements should be made for an additional 15% on that list of products for items imported on or after January 1, 2019.