The Office of the United States Trade Representative (USTR) has taken action to increase the additional duties on merchandise outlined in tranche three of the section 301 trade remedies from 10% to 25%, on Friday, May 10th, 2019. Negotiations with Chinese officials are set to happen later this week which could dissolve this action.
How This Affects Your Shipments In Transit
For goods imported into the U.S. from China, that appear on tranche three:
Anything that arrives to the U.S. port of entry before Friday May 10th, 2019 will have the existing rate of duty applied to it. See previous update on these tariffs here.
Anything that arrives on or after May 10th, 2019 will be subject to the increased rate of duty (surtax) of 25%.
Please note, the date of export from China bears no weight on whether the surtax of 25% will be applied or not. Instead the date of arrival determines the rate of duty (surtax).
How The U.S. Arrived At Increasing Chinese Tariffs
The initial notification of an increase came in from a tweet from President Trump on Sunday.
Originally, the tweets were perceived as a threat to gain leverage ahead of the Chinese Vice Premier Liu He’s arrival in Washington, DC later this week.
USTR’s Robert Lighthizer said the increase was a result of a recent breakdown in negotiations with China at a time when the two sides seemed close to a deal that would end the trade war. He further advised China had backed off on key issues that had been previously agreed to.
“Over the course of the last week or so, we have seen an erosion in commitments by China, I would say retreating from specific commitments that had already been made,” Lighthizer said.
In addition to increasing the additional duties on tranche three, Trump tweeted “$325 Billion Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%.”
China has threatened to retaliate if the U.S. follows through with the increase in tariffs.
Vice Premier Liu He is leading the Chinese delegation expected to arrive in Washington DC on Thursday May, 9th, 2019, to continue talks in an attempt to make a deal.
What Is Your Best Course Of Action?
Speak to a Trade Advisor today about alternative sourcing, valuation and tariff options that could result in a lower landed cost by contacting us at [email protected] today.
Update: May 10
The USTR announced via federal register that the increase on duties for goods manufactured in China on list 3 have increased from 10% to 25%.
Ordinarily the rate of duty applicable is based on the date of arrival to the United States.
Customs has made a special exception with the duty increase for List 3.
For List three the date the duty applies will be based on the date the goods are exported from the country of export en-route to the United States.
If your goods are exported from the country of export destined for the United States prior to May 10th, 2019, they would be subject to the 10% rate of duty so long as they are entered into the United States between May 10th, 2019 and June 1st, 2019.
Goods exported to the United States on May 10th and after will be subject to 25%, rate of duty.