On July 17, 2018, the US Trade Representative (USTR) published in the Federal Register a request for comments and notice of public hearing [USTR-2018-0026] concerning additional duties on certain Chinese products as a result of the section 301 investigation that was initiated in August 2017 into certain acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation. The notice states that the US is considering imposing an additional 10% duty on $200 billion worth of Chinese imports. Before doing so, the USTR will accept public comments and testimony at a hearing. The notice includes the schedule (see below), as well as the list of the 6,031 tariff subheadings covered by the $200 billion. In coming up with the list of covered HTS provisions, the notice provides as follows:
“In developing the list of tariff subheadings included in this proposed supplemental action, trade analysts considered products from across all sectors of the Chinese economy. The tariff subheadings considered by the analysts included subheadings that commenters suggested for inclusion in response to the April 6 notice. The selection process took account of likely impacts on U.S. consumers, and involved the removal of subheadings identified by analysts as likely to cause disruptions to the U.S. economy, as well as tariff lines subject to legal or administrative constraints.”
To be assured of consideration, comments and responses must be submitted in accordance with the following schedule:
- July 27, 2018: Due date for filing requests to appear and a summary of expected testimony at the public hearing, and for filing pre-hearing submissions.
- August 17, 2018: Due date for submission of written comments.
- August 20-23, 2018: The Section 301 Committee will convene a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington DC, 20436 beginning at 9:30 am.
- August 30, 2018: Due date for submission of post-hearing rebuttal comments.
The action was not unexpected. On July 10, the Trump Administration announced that the US was beginning the process to impose an additional 10% duty on a further $200 billion worth of Chinese imports.
As you may recall, when the Administration announced its intent to impose duties on $50 billion worth of Chinese imports, the Chinese government announced an intent to retaliate on a comparable value of US imports. At that time, President Trump announced that if China retaliated on US. imports, the United States would impose an additional duty on a further $200 billion worth of Chinese imports.
On June 20, 2018 (83 Fed. Reg. 28710), the USTR provided notice of an initial action in the Section 301 investigation of the acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation. The initial action was the imposition of an additional 25 percent ad valorem duty on products of China with an annual trade value of approximately $34 billion, effective July 6, 2018. China imposed an additional 25% duty on a first round of products also worth $34 billion that same day.
Both countries are also considering imposing additional duty on an additional $16 billion worth of merchandise. The June 20 Federal Register notice also sought public comment on the US proposed action, in the form of an additional 25 percent ad valorem duty on products of China with an annual trade value of approximately $16 billion. The public comment process in connection with the proposed additional action is ongoing.
These actions are being taken under section 301 of the Trade Act of 1974 (19 U.S.C. § 2411) which authorizes USTR to take all appropriate action, subject to the specific direction, if any, of the President regarding any such action, including retaliation, to obtain the elimination of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.
It is clear that the US-China trade war is real and that the Trump Administration is willing to accept meaningful US casualties (i.e., harm to US businesses with interests in China). It is also clear that the range of imports impacted by the duties is growing (by necessity).
All companies that import articles from China should be developing short, medium, and long-term plans for coping with this trade war.