On Friday, August 23, China announced its plans to impose 5% to 10% tariffs on $75 billion of American products in response to Washington’s recent tariffs on $300 billion of Chinese products. China’s new tariffs will take effect in two stages, the first on September 1, 2019 and second on December 15, 2019. The new
Administration Poised to Impose Additional Tariffs on $300 Billion of Chinese Goods Effective September 1st
Since last year, the Trump Administration has imposed tariffs ranging from 10 percent to 25 percent on nearly all imports of Chinese goods. Now, the Administration is set to impose an additional $300 billion of tariffs on Chinese goods as of September 1, 2019, that will cover all remaining goods, the so-called “List 4”
USTR Begins Section 301 “List 3” Exclusion Process
Last June, pursuant to Section 301 of the Trade Act of 1974, President Trump announced the imposition of a tariff of 25 percent on certain imported goods from China (valued at $34 billion) in response to China’s unfair intellectual property and market access practices. The Administration subsequently imposed tariffs on two more groups of Chinese
Section 301 Tariff Increase: Goods on the Water and Foreign Trade Zones
Effective May 10, 2019 importations of merchandise covered under the Section 301 third tranche, manufactured in China and entered into the U.S., are subject to the increase in additional duties from 10 to 25%. However, according to U.S. Customs and Border Protection updated guidance, the increased duties of 25% will not apply to goods a)
Tariffs on $200 billion of Chinese goods will increase to 25%, confirms Lighthizer
On Sunday, May 5, U.S. President Donald Trump tweeted that the current 10% tariff on $200 billion in Chinese imports to the United States would increase to 25% on Friday, May 10. On Monday, United States Trade Representative (USTR) Robert Lighthizer confirmed the administration’s plans, saying the tariff rate increase would take effect at 12:01
China Amends Law to Ban Theft of Foreign Trade Secrets
Last week, China amended a draft of a proposed foreign-investment law in an effort to address global concern over forced technology transfers. The new law, which bans officials from divulging corporate secrets, was approved by the Chinese legislature on Friday. The amendments were made shortly before the law was put to a vote and are
Third Wave of Section 301 Tariff Increases Officially Delayed
On March 5, 2019, the Office of the United States Trade Representative (“USTR”) published a notice in the Federal Register officially postponing the date on which the rate of Section 301 duties on $200 billion of Chinese goods (i.e., List 3 items) will increase from 10% to 25%.
USTR’s notice follows President Trump’s announcement of
China’s Vice Premier Liu He to Visit Washington at End of Month to Continue Trade Talks
Chinese Vice Premier Liu He will visit Washington on January 30-31, in connection with further discussions to resolve the ongoing trade dispute between the U.S. and China.
Vice Premier Liu is expected to meet with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin. Liu is a key economic advisor to President Xi
Mexico, China and Section 301
One of the potential consequences of the U.S.-China trade dispute is that more companies may consider supply chain sourcing from third countries such as Mexico. This may include direct sourcing in the third country or the processing of Chinese components into finished products in third countries prior to entry into the United States. There are a number of issues to consider where the processing of Chinese products subject to section 301 duties occurs in third countries prior to importation in the United States.
For example, the imported Chinese components processed in a third country may nonetheless be subject to section 301 duties when imported into the United States unless they are “substantially transformed” into a new and different article of commerce in the third country. This is a product-specific analysis and involves a review of components and production steps. Recently, the Court of International Trade ruled that mere assembly of foreign component parts does not constitute substantial transformation. (Energizer Battery Inc. v. United States, 190 F. Supp. 3d 1308 (Ct. Intl. Trade 2016). The decision noted that, “whether there has been a substantial transformation depends on whether there has been a change in the name or use of the components.” The court focused not on whether “the components as imported have the form and function of the final product” but rather “whether the components have a pre-determined end-use at the time of importation.” The court suggested that the imported parts would need to undergo “further work” beyond mere assembly to be considered substantially transformed.
China Lingers in the Background of USMCA
As we previously reported, the United States, Canada, and Mexico have reached agreement on the United States-Mexico-Canada Agreement (“USMCA”) to replace the North American Free Trade Agreement (“NAFTA”), which has governed trade between the three countries since 1994. Article 32.10 of the agreement requires each country to notify the others of any intention to negotiate a free trade agreement with a “non-market country.” The provision defines a “non-market country,” as any country that: (1) one or more USMCA member countries has determined to be a non-market economy for purposes of the USMCA member country’s trade remedy laws; and (2) none of the USMCA member countries has a free trade agreement with.
Last year, as a result of the expiration of certain language in China’s World Trade Organization (“WTO”) Protocol, the U.S. Department of Commerce conducted a review of its designation of China as a non-market economy country for purposes of the U.S. antidumping laws. The Department announced the results of its review of China’s status on October 26, 2017, concluding that China continued to be a non-market economy country. Further, none of the USMCA member countries have a free trade agreement with China. As a result, China would be considered a “non-market country” for purposes of the USMCA.
Article 32.10 requires a USMCA member country seeking to negotiate a free trade agreement with China, or any other “non-market country” to:
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