Introduction

On March 22 2018 President Trump signed a memorandum directing the Office of the United States Trade Representative (USTR) to publish a proposed list of approximately 1,300 products of Chinese origin that would be subject to an additional 25% ad valorem tariff pursuant to Section 301 of the Trade Act 1974 (19 USC § 2411). This action was taken following findings by the USTR that China's discriminatory licensing requirements, foreign ownership restrictions, state-funded acquisitions and state-backed hacking operations amounted to IP theft totalling hundreds of billions of dollars (for further details please see "President Trump announces tariffs on $50 billion of Chinese imports").

On April 3 2018 the USTR published a proposed list of Chinese products that could be subject to the Section 301 tariff. As expected, the list of affected tariff numbers is heavily geared towards the technology sector, including the aerospace, information and communication technology, robotics and machinery industries.

Affected products

Additional tariffs will be imposed on imports of products from China covering approximately 1,300 separate tariff lines. The products are defined at the Harmonised System (HTS) 8-digit level in the attached Annex.

Included are various products and parts classified in the following chapters:

  • Chapter 29 (chemical products);
  • Chapter 30 (pharmaceutical products);
  • Chapter 40 (rubber products);
  • Chapters 72 and 73 (steel and iron products);
  • Chapter 76 (aluminium products);
  • Chapter 84 (nuclear reactors and mechanical machinery);
  • Chapter 85 (electrical machinery);
  • Chapter 86 (railway locomotives);
  • Chapter 87 (other vehicles);
  • Chapter 88 (aircraft);
  • Chapter 89 (ships and other floating structures);
  • Chapter 90 (various types of optical, checking and medical device);
  • Chapter 93 (arms and ammunition); and
  • Chapter 94 (furniture and bedding).

The tariff applies only to goods of Chinese origin. The USTR is expected to publish further guidance on country of origin before the tariff becomes effective. However, pending further guidance, the origin of products will likely be determined according to US Customs and Border Protection rules of origin.

Notice and comment process

The Section 301 tariff will not become effective until after a notice and comment period, which will include a public hearing. The USTR's notice includes the following timeline:

  • April 23 2018 – interested persons must file requests to appear at the hearing, summaries of expected testimony and any pre-hearing submissions.
  • May 11 2018 – interested persons must file written comments with respect to any aspect of the proposed action, including the specific products covered, the rate of duty and the appropriate aggregate level of trade to be covered by additional duties. USTR also requests that comments address whether the tariff will be effective in reducing China's harmful acts, policies and practices and whether the tariff on a particular product would disproportionately harm US interests.
  • May 15 2018 – public hearing before the Section 301 Committee at the International Trade Commission at 10:00am.
  • May 22 2018 – parties must submit post-hearing rebuttal comments.

Due to the significant potential impact these additional duties may have on a wide range of products from China, importers are urged to review their imports from China and, if they are importing any of the listed products, to consider, at a minimum, filing written comments and possibly appearing at the public hearing.

For further information on this topic please contact Teresa Polino or Leah Scarpelli at Arent Fox LLP by telephone (+1 202 857 6000) or email (teresa.polino@arentfox.com or leah.scarpelli@arentfox.com). The Arent Fox LLP website can be accessed at www.arentfox.com.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.