As President Donald Trump threatened last weekend — just days after the Section 301 tariff on List 3 products was increased from 10 percent to 25 percent following a breakdown in trade negotiations between the United States and China — the Administration on Monday released a fourth list of Chinese-origin products to be subject to additional duties.
For these tariffs to become effective, the US Trade Representative will need to publish a final notice after public comment and hearing.
The United States and China have been engaged in protracted negotiations over the Chinese government’s acts, policies, and practices related to technology transfer, intellectual property, and innovation that the Trump Administration has found to be unreasonable and burdensome to US commerce.
To date, the President has used his authority under Section 301 of the Trade Act of 1974 three times to levy a 25 percent retaliatory tariff on 6830 subheading categories of imported Chinese high-tech and consumer goods valued at $250 billion per year. Although List 3, alone valued at $200 billion, had originally set an additional duty rate at 10 percent, that rate was increased to 25 percent effective 12:01 A.M. May 10, further straining the bilateral talks.
New Products for China Tariffs
Moreover, after China allegedly “retreated from specific commitments made in previous rounds” and increased its own tariffs against US goods, the USTR officially proposed a fourth list of goods valued at nearly $300 billion. This 135-page List 4 would comprise 3805 categories of goods including cellphones and other electronic devices, agricultural products like cheese, toys, apparel, home goods, shoes, sporting goods, chemicals, and child safety seats.
If this proposal is accepted, all Chinese imports excluding certain pharmaceuticals, medical products, rare earth metals, and minerals will be subject to a 25 percent extra levy.
Before List 4 can take effect, the proposal will undergo a public comment period and hearing similar to those for Lists 1 through 3. The dates are:
- June 10: Deadline to request to appear at hearing
- June 17: Deadline to submit pre-hearing comments
- June 17: Public hearing at USTR
- June 24: Deadline to submit post-hearing rebuttal comments (due 7 days after the final day of hearings).
USTR has requested that comments focus on:
- The specific tariff subheadings to be subject to increased duties, including whether the subheadings listed in the proposal should be retained or removed, or whether subheadings not currently on the list should be added;
- The level of the increase, if any, in the rate of duty;
- The appropriate aggregate level of trade to be covered by additional duties;
- Whether imposing increased duties on a particular product would be practicable or effective to obtain the elimination of the concerned Chinese acts, policies, and practices; and
- Whether imposing additional duties on a particular product would cause disproportionate economic harm to US interests, including small- or medium-size businesses and consumers.
President Trump has indicated his desire to meet with Chinese President Xi Jinping at a G20 summit in Osaka, Japan in late June, which may affect the implementation of List 4. However, absent progress on negotiations, USTR could publish the final version of List 4 as soon as July with an effective date shortly thereafter if it moves as fast as it did to implement earlier tariffs.
A combined list of the products covered by Section 301 Lists 1, 2, 3, and 4 is available here.
Meanwhile, USTR published its fourth notice of product exclusions for List 1. The excluded goods, mostly machinery, include outboard motor engines for boats, certain fork lifts, ATM circuit boards, and pressure valves. It remains unknown whether a process for importers to request an exclusion of specific products would accompany List 4 as it did for Lists 1 and 2, and as is expected to be announced before the end of the month for List 3. The USTR confirmed that List 3 will have an exclusion process only after the duty rate was increased from 10 percent to 25 percent.
List 3 Increased Tariff Rate Effective Date
Furthermore, following an updated CSMS message, USTR published in the Federal Register a notice stipulating that List 3 goods already in transit from China before May 10 and entered prior to June 1 will be subject to the 10 percent duty rate rather than the higher 25 percent rate. Goods exported and entered on or after May 10 will be assessed the 25 percent rate, as will all goods entered on or after June 1, regardless of export date.