October 1st carries tremendous cultural significance in China, and this year the country is celebrating the 70th anniversary of the People’s Republic of China. Perhaps with an eye to this, plus in response to China’s awarding of the first exclusions to US products from their additional import duties, President Trump announced a delay from October 1st to October 15th in the planned increase of Section 301 duties on the items on lists 1, 2 and 3. Scheduled to increase by 5% from 25% to a planned 30%, the President announced his delay on Twitter on Thursday evening.
For US importers, this temporary stay should likely be seen as just that…temporary…until further, more concrete signs appear. Certainly China’s sixteen exclusions to which they added soybeans and pork (in response to a massive reduction in their pig population because of African Swine Flu) could come into play when US and Chinese negotiators sit down again next month in Washington.
Importers who had previously been paying 25% in additional duties for Lists 1, 2 and 3 will find themselves paying 30% beginning October 1, 2019. In the increasingly tit-for-tat trade war between the United States and China, on Friday morning Beijing increased the duty on $75 billion in American exports to their country. The increases, set to match the American September 1st and December 15th dates, increase duties between 5 and 10% on a wide list of products. For automotive manufacturers, however, December 15th is when China restores a 25% duty on imported automobiles.
The President and his economic advisors met throughout the day prior to departing for the G7 meetings in France and at the end of the day announced the actions that would be taken. By the end of the day Friday, a statement was posted on the USTR’s website and publication in the Federal Register will happen most likely next week.
The changes that were announced were:
- Lists 1, 2 and 3 on which 25% additional Section 301 duties were being collected will increase by 5% to now 30% on October 1, 2019.
- Lists 4A and 4B, slated to collect 10% additional duty when they become effective on September 1 and December 15, respectively, will be increased by 5% to now 15% with the same dates of imposition.
Importers and exporters are asking themselves what the ceiling could be for these duties in both countries. The honest answer is that we don’t know. What traders should be concerned and be vigilant for are non-tariff barriers, or restrictions that make it more difficult for products to get to market for additional safety checks, declarations to government agencies or delays in obtaining customs releases in one or both countries.
Kesco understands that this fluid situation is causing commercial challenges for our customers and are working with our overseas partners and our Kesco Customs Solutions teams to do our best to help keep everyone informed and their goods moving through their supply chains.