China Tariffs to Increase to 25% as of May 10, 2019
*** Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation *** (Federal Register)
The “Section 301 action” was released back in September, as part of the US’ continuing response to “China’s abuse of intellectual property and forced transfer of American technology”. This rule included the immediate assessment of an additional 10% duty on some 6000 items (List #3), including all food products that we import from China. According to this rule the 10% additional duty was to increase to 25% with respect to products entered into the US after January 1, 2019; however, the increase was subsequently postponed.
Following lengthy trade talks between the U.S. and China during the past months no agreement was made. Therefore, on May 9th, 2019, “the US Trade Representative has determined to modify the action being taken in the Section 301 investigation by increasing the rate of additional duty from 10% to 25% for the products covered by the September 2018 action in this investigation.” Chinese goods entered through Customs into the U.S. on June 1st or later will be subject to a 25% additional duty rate irrespective of the date of export. The additional tariffs apply to products of China, and are based on the country of origin, not country of export.
However, in reply to the above measures, China has just announced the increase of retaliatory tariffs, ranging between 5% and 25%, on $60 billion worth of U.S. goods as of June 1st. China will accept requests for exclusions from its tariffs, depending on the nature of the product.
There seems to be plenty of pressure from businesses on both sides that are hurting because of these additional duties; we can only hope that the two countries will reach an agreement between now and June 1st.