On June 15, 2018, the White House issued a statement by the President confirming that the United States will impose an additional 25% customs duty on $50 billion worth of imports from China. The additional duty will be assessed on goods that “contain industrially significant technologies[,]” including those “related to China’s Made in China 2025 strategic plan to dominate the emerging high-technology industries[,]” according to the statement. The statement goes on to say that the additional duty is “essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs. In addition, they will serve as an initial step toward bringing balance to the trade relationship between the United States and China.” Finally, the statement indicates that the United States will consider further additional duties if China retaliates (which it is expected to do).
Following the issuance of the White House statement, the US Trade Representative published a notice on its website containing the list of products/tariff classifications that will be subject to the additional 25% duty. The list is broken down into two pieces and focuses on “industrial” (not consumer) products.
The first piece contains 818 of the original 1,333 tariff classifications proposed in the list published on April 6, 2018. These 818 tariff classifications represent approximately $34 billion worth of imports from China and the additional 25% duty will be assessed beginning on July 6, 2018.
The second piece contains 284 new tariff classifications identified by the interagency Section 301 Committee as benefitting from China’s industrial policies, including Made in China 2025. These 284 tariff classifications represent approximately $16 billion worth of imports from China. This list of tariff classifications will be subject to a new/separate public Federal Register notice and comment process (including a hearing). The details are expected to be published shortly. A decision will be made whether to impose additional duties on products on this second list thereafter.
The USTR notice also states that it will “soon provide an opportunity for the public to request exclusion of particular products from the additional duties subject to this action.” This process will be detailed in a subsequent Federal Register notice.
We recommend that all clients review both lists published by the USTR. We also recommend that clients keep their eye on the news. It is widely expected that China will retaliate by imposing duties on U.S. exports to China. In such a case, it is likely that the administration will seek to expand the second list of products subject to additional duties (the President had previously threatened to impose duties on an additional $100 billion worth of Chinese imports). Finally, it is also important to stay tuned for the Federal Register notice that will be published with additional details, including on the product exclusions process.