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Analysis of Product List Subject to Section 301 Tariffs Shows Focus on Chemicals, Machinery, Other Products

As previously reported, the United States imposed on 24 September additional tariffs on some US$200 billion worth of imports from mainland China. The tariffs have initially been set at ten percent but will rise to 25 percent on 1 January 2019. This is in addition to the 25 percent tariffs that the United States imposed earlier this year on US$50 billion worth of mainland Chinese goods in response to 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. As a result, a total of 6,842 tariff lines are currently subject to additional tariffs under Section 301.

An analysis of the tariff lines subject to the Section 301 measures shows a particular focus on certain sectors, namely (1) chemicals and allied industries (including plastic products and paints/dyes); (2) machinery and equipment (including electrical and electronic equipment, automotive products and precision instrumentation products); (3) textile fibres, yarns, fabrics and certain other textile products (other than apparel or footwear); (4) certain agricultural products (mainly prepared foods, vegetables and fish products); and (5) certain wood, glass, iron/steel and other metal products.

So far, the tariffs have mostly targeted raw materials and intermediate products and have generally shied away, to the extent possible, from the most popular finished consumer products where mainland China holds a particularly large share of the U.S. import market. Key consumer goods that have not been targeted to date include, among others, apparel and made-up textiles of HS chapters 61 through 63, footwear of HS chapter 64, toys of HS chapter 95, and various household appliances and personal electronic products such as computers, cellular phones and smartwatches of HS chapters 84 and 85.

The creation effective from 24 September of two new ten-digit statistical reporting numbers (HTSUS 8517.62.0020 and 8517.62.0090) to administer the Section 301 tariff on certain mainland Chinese machines for the reception, conversion and transmission or regeneration of voice, images or other data of subheading 8517.62 was intended to exclude a number of electronic products – such as smartwatches and certain Bluetooth devices – that were previously classified under HTSUS 8517.62.0050 and now fall under HTSUS 8517.62.0090. Of the three ten-digit tariff lines currently within subheading 8517.62, modems of a kind used with data processing machines of heading 8471 classified under HTUS 8517.62.0010 and switching and routing apparatus classified under HTSUS 8517.62.0020 are subject to additional tariffs, but all other products, which now fall within HTSUS 8517.62.0090, are exempt.

Some US$22.8 billion worth of mainland Chinese goods were imported into the United States under subheading 8517.62 last year, making it the third most important subheading for mainland Chinese products in the United States in terms of total import value. However, for the time being it is impossible to know with any degree of certainty what percentage of that trade has been excluded from the tariffs, as no import data has yet been gathered and published for HTSUS 8517.62.0090. Preliminary estimates as to the impact of the Section 301 tariffs on subheading 8517.62 are not expected to be available until around 6 December when the U.S. import data for October 2018 is scheduled to be published.

Meanwhile, in a recent tweet President Trump claimed that mainland China is placing “propaganda ads” in various U.S. newspapers in an effort to discredit the trade policy of his administration. He also asserted in a 25 September meeting with Japanese Prime Minister Shinzo Abe that mainland China is trying to meddle in the upcoming U.S. mid-term elections by “going and attacking the farm belt, our farmers” with ads and statements that look like editorials. Trump reiterated his election meddling claim in a 26 September appearance before the United Nations Security Council, stating that “they do not want me or us to win because I am the first president ever to challenge China on trade.”

Content provided by Picture: HKTDC Research
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