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Tariffs on US$200 Billion in Mainland Chinese Goods to Rise from 10 to 25 Percent on 10 May

The Office of the U.S. Trade Representative has issued an official notice to be published in the Federal Register on 9 May increasing from 10 percent to 25 percent the additional tariff currently in place on US$200 billion worth of goods imported from mainland China (List 3 goods). A review of the draft notice, together with additional input provided by USTR, appears to indicate that the increase will be effective with respect to subject go0ds that meet both of these conditions: (1) are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on 10 May; and (2) are exported to the United States on or after 10 May.

U.S. Customs and Border Protection has already made all the necessary changes to the Automated Commercial Environment to ensure the increase is implemented as scheduled. President Trump has also pledged to impose additional duties on all goods from mainland China not already subject to higher tariffs under the Section 301 process (List 4 goods) but a formal announcement to that effect has not yet been made.

The Trump administration has been negotiating a trade agreement with mainland China and senior officials had said in recent weeks that talks were making good progress. However, in an apparent justification of the tariff increase, Trump said on social media over this past weekend that the discussions are going “too slowly” and Beijing is attempting to “renegotiate.”

A report from Reuters indicates that Trump administration officials were baffled after Beijing ostensibly reneged on a range of commitments via a diplomatic cable sent on 3 May. According to the report, mainland China backed out of assurances made during its prolonged bi-lateral negotiations with the United States to modify its laws in such areas as intellectual property and trade secrets, forced technology transfers, currency manipulation, competition policy and access to financial services. The report adds that Beijing claims it can fulfil any agreed commitments through administrative and regulatory changes, but the United States is insisting on actual changes to mainland Chinese laws to ensure U.S. demands are effectively met. Be that as it may, a delegation led by mainland Chinese Vice Premier Liu He was still scheduled to arrive in Washington on 9 May for further talks with their U.S. counterparts, although a last-minute breakthrough that would allow the impending tariff increase to be put on hold appears unlikely at this point.

The USTR notice also indicates that the agency has determined to establish a product exclusion process for List 3 products and will publish a separate notice describing such process, including the procedures for submitting exclusion requests and an opportunity for interested persons to submit oppositions to a request.

Content provided by Picture: HKTDC Research
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