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Delay in Section 301 Tariffs Effectively Implemented

As previously reported, President Trump said in a 24 February tweet that, in light of the “substantial progress…on important structural issues” made in the still on-going bi-lateral trade negotiations with mainland China, he would be delaying the increase from 10 percent to 25 percent in the additional Section 301 tariffs on so-called List 3 goods (valued at about US$200 billion) that was scheduled to take place on 2 March. The tweet announcing the delay was sent two days after the president met at the White House with members of the U.S. and mainland Chinese delegations.

In light of the president’s instructions, the Office of the U.S. Trade Representative has issued a draft notice implementing the delay in the tariff increase “until further notice.” Formal publication of the notice in the Federal Register will occur shortly. Moreover, U.S. Customs and Border Protection confirmed in a 28 February electronic message to the trade community that the tariff increase is effectively on hold.

While this action represents a significant positive development, the open-ended nature of the tariff delay (with no clear timeline or deadline) means that mainland Chinese exporters and U.S. importers of List 3 goods will continue to face a high degree of uncertainty, as the president could potentially instruct USTR to implement the tariff increase with little advance notice if the current trade negotiations with mainland China are ultimately unsuccessful. It does appear, however, that the tariff increase will be stayed at least until President Trump meets with mainland Chinese President Xi Jinping later this month to resolve remaining issues.

Content provided by Picture: HKTDC Research
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