12 July 2018
Additional Ten Percent Tariff Proposed on US$200 Billion Worth of Imports from Mainland China
The U.S. government is proposing to further escalate its efforts to address concerns with mainland China’s policies on intellectual property protection by imposing an additional ten percent duty on approximately US$200 billion worth of imports spanning 6,031 tariff lines from mainland China. This action would be in addition to the 25 percent tariff imposed on US$34 billion worth of mainland Chinese goods effective 6 July and a proposal to extend that tariff to an additional US$16 billion worth of imports from the mainland at some yet-to-be-determined date. These actions follow a Section 301 investigation determination that mainland China’s acts, policies and practices related to technology transfer, intellectual property and innovation are “unreasonable and discriminatory.”
The new list includes a range of products of special commercial importance for Hong Kong and mainland Chinese exporters, including, among others, various travel goods of heading 4202; leather products of heading 4203; plastic products of Chapter 39; tyres of heading 4011; textile products of Chapters 50 through 60; headwear of Chapter 65; furniture of heading 9403; lamps of heading 9405; certain printed circuit assemblies classified under HTSUS 8473.30.11; and, perhaps most notably, machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus, classified under HTSUS 8517.62.00. On the other hand, the proposed list does not include any apparel products (Chapters 61 and 62), footwear products (Chapter 64), or toys and games (Chapter 95).
USTR notes that in developing the list of tariff subheadings included in this proposed supplemental action trade analysts considered products from across all sectors of the mainland Chinese economy. The tariff subheadings considered by the analysts included subheadings that commenters suggested for inclusion in response to the 6 April 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.
USTR adds that, in an effort to ensure the effectiveness of the action, any merchandise subject to the increased tariffs admitted into a U.S. foreign trade zone on or after the effective date of the increased tariffs, except those eligible for admission under “domestic status” as defined in 19 CFR 146.43, would have to be admitted as “privileged foreign status” as defined in 19 CFR 146.41 and would be subject upon entry for consumption to the additional duty.
USTR will hold a public hearing 20-23 August in Washington, D.C., to receive input on the proposed ten percent tariff. Requests to appear at the hearing, summaries of expected testimony and pre-hearing submissions are due by 27 July, and post-hearing rebuttal comments are due by 30 August. USTR is also accepting written comments through 17 August. USTR will analyse all of the information submitted and make a final decision sometime thereafter.
Input may be submitted on any aspect of the proposed supplemental action, including (i) the specific tariff subheadings to be subject to the increased duty, including whether the subheadings listed should be retained or removed or whether subheadings not currently on the list should be added; (ii) the level of the increase, if any, in the rate of duty; and (iii) the appropriate aggregate level of trade to be covered by additional duties. In commenting on the inclusion or removal of particular tariff subheadings, USTR requests that commenters address specifically whether imposing increased duties on a particular product would be practicable or effective to obtain the elimination of the targeted mainland Chinese acts, policies and practices, and whether maintaining or imposing additional duties on a particular product would cause disproportionate economic harm to U.S. interests, including consumers and small- or medium-sized businesses.
In a statement issued on 11 July, a spokesperson for mainland China’s Ministry of Commerce expressed “solemn protest” against the new list of products and warned that mainland Chinese authorities “will, as always, be forced to take necessary countermeasures.” Beijing will also file another WTO complaint against this action and, in the meantime, is calling on the international community to “jointly defend free trade rules and the multilateral trade regime and fight trade bullying.”