President Trump on August 1 announced via Twitter that, beginning on September 1, the United States will impose additional Section 301 duties of 10% on Chinese-origin products with an annual trade value of approximately $300 billion, covered by List 4.
President Trump had agreed in June not to impose more tariffs while the two sides tried to reach a trade deal, but said August 1 that China has reneged on its agreement to buy agricultural products from the United States in large quantities, and also did not fulfill its commitment to stop the sale of fentanyl into the United States.
The announcement follows the office of the US Trade Representative (USTR)’s May publication of a notice in the Federal Register proposing additional Section 301 duties of up to 25% on the List 4 products. (For prior coverage of the List 4 tariffs, see PwC Insights, USTR proposes more tariffs on long list of China imports, May 15, 2019.)
Products that will be affected by the tariff increase include essentially all products not previously included in Lists 1-3, including all apparel, footwear, and manufactured textile products, as well as common consumer goods such as cellphones, televisions, toilet seats, and pillows. The proposed product list excludes pharmaceuticals, certain pharmaceutical inputs, select medical goods, rare earth materials, and critical minerals. Product exclusions granted by the USTR with respect to Lists 1-3 would not be affected.
Now that President Trump has announced that additional duties on almost all remaining Chinese-origin products will begin in one month, US companies engaging in business with China need to assess their duty exposure. List 4 reinforces the importance of those companies taking action aimed at making their trade function and supply chains as efficient as possible.
Companies in previously unaffected industries need to re-examine their import profiles and supply chains, including the use of available analytical tools, to determine potential impacts and explore mitigation strategies.
For a deeper discussion regarding the Section 301 tariffs and how your business may be able to mitigate risks in the changing trade environment, please contact:
Simeon Probst, Partner
Customs, Trade and Indirect Taxes, PwC Basel
Tel. +41 58 792 53 51
Image source: unsplash.com