The Office of the U.S. Trade Representative (USTR) has announced that President Trump is moving forward with additional tariffs in its Section 301 investigation involving China’s acts, policies and practices related to forced technology transfers and intellectual property rights. The USTR has finalized a third list of Harmonized Tariff Schedule (HTS) subheadings resulting in additional tariffs of $200 billion on imports of Chinese products. The additional tariffs will go into effect September 24, 2018, and will be 10 percent at the start. The USTR has stated that these tariffs will increase to 25 percent on January 1, 2019. In making the announcement, President Trump stated, “For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies. We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices.” These tariffs are in addition to two earlier rounds of tariffs implemented against Chinese products (see Trump and Trade updates of June 18, 2018 and August 8, 2018) that amount to tariffs on $50 billion of Chinese products imported into the United States.

The final third list contains 5,745 full or partial HTS subheadings covering a wide range of products, including food, chemicals, pesticides, minerals, fabrics, construction materials, handbags, luggage, car parts, appliances, machines, televisions, items made from steel and aluminum, batteries, semiconductor assemblies and furniture. Only 297 HTS subheadings were removed from the original proposed list released in July 2018. Products covered by the HTS subheadings removed from the proposed list are certain consumer electronics products, certain chemical inputs for manufactured goods, textiles and agriculture, and certain health and safety products.

The president indicated that he will pursue tariffs on approximately $267 billion of additional imports if China takes retaliatory action. Almost immediately after the announcement by the USTR of these additional tariffs, China responded by announcing that it would impose import tariffs on approximately $60 billion of U.S. products, also effective September 24.

China’s tariffs on U.S. products will be covered under two separate lists – one list will be subject to 10 percent tariffs, and the second list will be subject to 25 percent tariffs. These lists cover over 5,000 products and include such items as wood veneer, non-electrical machines, makeup, natural gas, wood pulp, optical media, and needles and catheters. In making this announcement, the China Ministry of Commerce stated, “In order to safeguard its legitimate rights and interests and the global free trade order, China will have to retaliate as a response.” These actions further cloud the possibility of any near-term bilateral negotiations on U.S.-China trade issues.