11 July 2018
On July 10, 2018, the Office of the US Trade Representative (“USTR”) announced a list of additional products imported from China that will be subject to a 10 percent tariff. This latest action continues the fallout from the results of USTR’s investigation into Chinese trade and industrial policies that harm US intellectual property, which was initiated last year under Section 301 of the Trade Act of 1974. USTR will be seeking public comment and will hold a public hearing regarding these proposed modifications resulting from the investigation before imposing a final decision. The recent announcement follows the imposition of a 25 percent tariff on $34 billion worth of Chinese goods, which became effective on July 6, 2018. China immediately responded in kind and vowed to begin adding tariffs on 545 American imports, including a large number of agricultural products, such as soybeans, cotton, rice, sorghum, beef, pork, dairy, nuts and produce.
The Trump administration (“Administration”) continues to escalate already tense trade relations with China by releasing the new list. This latest list covers around $200 billion worth of Chinese goods. The proposed new list broadens the types of goods from previous lists and covers thousands of new products such as seafood, minerals and chemicals and consumer products such as consumer electronics, handbags, luggage and paper. Other Chinese-made goods proposed to face the new 10 percent tariff include building supplies, industrial machinery, certain wool products, woven cotton fabrics, other textiles and certain automobile parts, including tires. (The full tariff list can be found here.) This new list brings the percentage of Chinese exports facing new US duties to about 50 percent, based on last year’s import estimates.
While trade relations continue to remain tense, Administration officials are hopeful that China will take these new actions seriously and work toward correcting and alleviating US concerns about intellectual property theft and forced technology transfers. In the meantime, China’s Ministry of Commerce has stated that the new tariff list is “totally unacceptable.” It has also stated that China plans to impose countermeasures and will file a lawsuit at the World Trade Organization against the United States. Although Administration officials claim to be open and willing to engage in negotiations to avert an all-out trade war with China, no plans for any future meetings between the United States and China have been made public.
Congress, including House Ways and Means Committee Chairman Kevin Brady (R-TX) and Senate Finance Committee Chairman Orrin Hatch (R-UT), have expressed concerns and are urging the president to come up with a solution that will establish a fair trade relationship between the two economic powers.
The latest announcement by USTR sets forth the following timeline for public comment and consideration of the potential new tariffs:
- July 27, 2018: Due date for filing requests to appear at a public hearing.
- August 17, 2018: Due date for submission of written comments on the proposed tariffs.
- August 20-23, 2018: Public hearing on proposed tariffs.
- August 30, 2018: Due date for submission of post-hearing rebuttal comments.
Based on this timeline, a final decision on the tariffs could be made sometime after August 30, 2018.