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Tariffs on $200 Billion in Chinese Goods Could Jump from 10 to 25 Percent as of May 10

Tuesday, May 07, 2019
Sandler, Travis & Rosenberg Trade Report

President Trump is threatening to increase a 10 percent additional tariff on $200 billion worth of goods imported from China (List 3 goods) to 25 percent effective May 10 and to impose a new 25 percent additional tariff on all goods from China not already subject to higher tariffs under the Section 301 process (List 4 goods). These tariff increases would affect a broad range of consumer and other goods. Importers should quickly evaluate their exposure to these potential developments and seek ways to mitigate their impact before they take effect. 

The Trump administration has been negotiating a trade agreement with China and senior officials had said in recent weeks that talks were making good progress. However, in an apparent justification of the potential tariff increase, Trump said on social media over the weekend that the discussions are going “too slowly” and Beijing is attempting to “renegotiate.” Considering that the warning came just days before the expected arrival of a Chinese delegation in Washington for what could be the final round of talks, it could thus be intended to give U.S. officials additional leverage in those negotiations.

Any decision to actually impose the threatened tariff increases would have to be made via an official communication from the White House. The White House has delayed these increases twice before and could do so again depending on various factors, including progress in the next round of talks and the reaction of financial markets. That reaction had been largely negative at press time, and trade and industry groups were raising concerns that the tariff increase could cost nearly one million U.S. jobs, lower domestic economic output, and increase prices for consumers.

In the meantime, there have been reports that the Office of the U.S. Trade Representative is working to develop a process to allow requests to exclude products from the additional tariff on List 3 goods. Despite a congressional directive to do so, USTR Robert Lighthizer has said it would not happen unless this tariff is increased to 25 percent.

Please contact trade law firm Sandler Travis & Rosenberg, P.A. to discuss how you can reduce your exposure to these potential tariff increases through early importation or entry, tariff classification, tariff engineering, first sale, and other methods.

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