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Proposed Additional Tariff on US$200 Billion Worth of Imports from Mainland China May Be Increased from 10 to 25 Percent

President Trump has directed U.S. Trade Representative Robert Lighthizer to consider modifying a 10 July proposal to impose an additional 10 percent tariff on approximately US$200 billion worth of imports spanning 6,031 tariff lines from mainland China by hiking the proposed tariff rate from 10 to 25 percent. The 25 percent tariff would be applied to the same list of products that was announced on 10 July. This announcement was made as U.S. Treasury Secretary Steven Mnuchin and mainland Chinese Vice Premier Liu He are looking for ways to potentially restart bi-lateral trade talks and seemingly represents another win for the more protectionist wing of the Trump administration.

To give interested parties an opportunity to comment on the proposed hike in the tariff rate, the Office of the U.S. Trade Representative has extended from 30 August to 5 September the deadline for post-hearing rebuttal comments on the proposed action. Moreover, requests to appear at the previously announced 20-23 August public hearing may now be submitted by 13 August in lieu of 27 July. USTR will analyse all of the information submitted and make a final decision sometime thereafter.

As previously reported, the proposal targets 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).

This particular 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.”

According to a 1 August statement by USTR Lighthizer, “the increase in the possible rate of the additional duty is intended to provide the Administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens.” Mainland China’s Foreign Ministry spokesman Geng Shuang had previously said in response to rumours regarding the impending increase in the proposed tariff rate that “U.S. pressure and blackmail won’t have an effect,” warning that if the United States escalates the current dispute mainland China “will inevitably take countermeasures and we will resolutely protect our legitimate rights.”

Content provided by Picture: HKTDC Research
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