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U.S. Finalises Third Tranche of Additional Tariffs on Mainland Chinese Products, Threatens Tariffs on More Goods

The Office of the U.S. Trade Representative has finalised a proposal to impose effective from 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.

The final list contains 5,745 tariff lines, compared to the 6,031 tariff lines that were included in the proposed list. All but 11 of the listed subheadings are covered by the additional tariffs in their entirety, while those 11 are only “partially covered” (reflecting the exclusion of certain specific products). Changes to the proposed list were made after USTR and the inter-agency Section 301 Committee received input over a six-week period as well as testimony during a six-day public hearing in August.

USTR noted in a 17 September press release that it fully or partially removed 297 tariff lines from the initial list after engaging in a “thorough process to rigorously examine the comments and testimony.” According to the agency, among the products removed are certain consumer electronic products such as smart watches and Bluetooth devices; certain chemical inputs for manufactured goods, textiles and agriculture; and certain health and safety products such as bicycle helmets as well as child safety products such as car seats and playpens.

The third tranche of tariffs 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; and certain printed circuit assemblies classified under HTSUS 8473.30.11. 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, are only partially subject to the tariffs as the final list includes only switching and routing apparatus and modems. On the other hand, the final list does not include any apparel products (Chapters 61 and 62), footwear products (Chapter 64), or toys and games (Chapter 95).

As expected, Beijing will impose tariffs of its own on a tit-for-tat basis effective from 24 September in retaliation for this action. The retaliation will be in the form of an additional five percent or ten percent tariff, depending on the product, and will cover more than 5,000 types of U.S. goods with an import value of about US$60 billion.

In a statement issued on 17 September, President Trump threatened to “immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports”, if mainland China took retaliatory action. Given that Beijing has already taken such action, the administration could very soon kick off the process to impose additional tariffs on the balance of U.S. trade with mainland China. Should that occur, that list of products would almost certainly include key consumer goods like apparel, footwear and toys.

Content provided by Picture: HKTDC Research
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