What you need to know about tomorrow’s tariff increase from China.

The Office of the United States Trade Representative has published in the Federal Register notice of the proposed increase of duty from 10% to 25% for all goods on the third annex (or list) from China. These three lists of additional duties are in response to a finding in a Section 301 National Security investigation on China’s trade practices and IPR infringement. While the President and the USTR are seeking a deal which covers a wide variety of trade issues, the three rounds of duty increases have been of the greatest concern, with the potential foreshadowing of a fourth list which would cover all remaining exports from China – effectively imposing a de facto 25% duty increase on everything the country exports to the United States.

The fine print: It takes effect on exports leaving from tomorrow onwards, not goods already in transit.

The language in the Federal Register notice which you can read by clicking the “Read More” button below, specifically “Effective with respect to goods (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019…”

This means that air and sea shipments departing from tomorrow onwards increases to 25%, but any ocean freight which has already sailed or air shipments which have been exported from today or earlier will be entered at 10%. As with the previous two lists, there will be ways to apply for exclusions, but that is a concern to be addressed after importers come to grips with the tomorrow increase.

It is believed that it was phrased this way to allow wiggle room for the negotiators who are trying to reach an agreement as soon as possible. US and Chinese delegations are meeting in Washington DC right now.

If you have any questions, contact your Hamanaka representative.

Copyright © 2019 Ken Hamanaka Co Inc/Crosswinds Intl Inc, All rights reserved

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