On Sunday May 5, 2019, in between tweets about Saturday’s Kentucky Derby result and the Mueller report, President Trump announced that (i) the 10% duty on articles included on List 3 would increase from 10% to 25% this coming Friday (May 10, 2019), and (ii) a 25% duty would be imposed on the remaining $325 billion worth of imports from China “shortly”.

This announcement is a bombshell, particularly given recent stories about all of the progress being made in the negotiations between the United States and China. Secretary Mnuchin and USTR Lighthizer were in China last week, and Vice Premier Liu was expected to come to Washington, DC this week, to continue (and potentially complete) those negotiations. We believe that today’s announcement should be viewed in that context – i.e., the negotiations may be down to the final stages and President Trump is using the leverage he has to cinch the deal. In particular, people should watch to see if Vice Premier Liu still comes to Washington, DC this week for talks, or whether he stays home in response to today’s tweets. If he does come to town, then there is a greater likelihood that a deal is reached (and the proposed increase in duties may be mooted or delayed); whereas, if he stays home, then the proposed increase in duties take effect.

Unfortunately, President Trump believes that the Section 301 duties are “mostly borne by China” and “have had little impact on product cost”. As a result, all companies that import articles from China (whether currently subject to the Section 301 duties or not) should be watching the news this week for further developments. Interesting times.