President Trump continues his threat to impose a new 25 percent additional tariff on $200 billion worth of goods originating from China as part of his section 301 efforts to protect U.S. intellectual property. List 3 goods related to this subject that currently carry a 10 percent tariff are subject to the increase, effective May 10, 2019. The Chinese government imposed a retaliatory additional 25 percent tariff on hundreds of U.S. products as a result of the previous Lists 1 and 2 increases on products from China.
U.S. Trade Representative Robert Lighthizer and Secretary Steve Mnuchin were in China last week for negotiations and the Chinese delegation, including Vice Premier Liu, is due to arrive in Washington, D.C. for another round of talks this week after previously threatening to cancel them. In a Tweet earlier today, President Trump stated they are attempting to “renegotiate” the deal; he closed his Tweet with “we’ll see.” Another planned round of tariff increases impacting List 4 goods encompasses an even broader spectrum of products.
Some feel the timing of the announcement in advance of the delegation’s trip to Washington, D.C. is an attempt to enhance U.S. leverage. Proposed increases have been postponed twice in the past, but those close to the White House suggest there is no delay anticipated.
Currently, there is no established process for product exclusion requests, but sources advise that U.S. Trade Representative Robert Lighthizer is working to develop one. Tariff increases are dramatically impacting the bottom line and profitability of almost all American companies. Importers, in particular, are considering mitigation strategies; recent such examples include buying goods in advance of tariff increases; the reengineering of products for reclassification purposes; and, sourcing from locations outside of China.
AFS Logistics’ global supply chain team will continue to monitor and offer assistance in these trying times.