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China Tariff Hike Delay Formalized; Beijing to Lower Import Duties on U.S. Autos

Monday, December 17, 2018
Sandler, Travis & Rosenberg Trade Report

A planned increase from 10 percent to 25 percent in the Section 301 additional tariff on $200 billion worth of imports from China is being delayed from Jan. 1 to March 2. At the same time, China has announced plans to suspend a higher duty on U.S. automobiles and auto parts and to increase purchases of U.S. soybeans and corn. (Click here for more details on these and other developments in the U.S. Section 301 case against China.)

During a meeting earlier this month, President Trump and Chinese President Xi Jinping agreed to various measures to create a more favorable environment for negotiations on what the White House called “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.” The two sides said they would work to complete such talks within 90 days; if no agreement is reached within that time, the 10 percent additional tariff currently in place on so-called List 3 items from China will be increased to 25 percent.

The Office of the U.S. Trade Representative published on its web site Dec. 14 a formal notice of the tariff increase delay that is expected to be published in the Federal Register in the coming days. As a result, U.S. Customs and Border Protection should be able to quickly make the necessary changes in the Automated Commercial Environment to ensure that the additional tariff does not increase to 25 percent until 12:01 a.m. on March 2. As a result, Sandler, Travis & Rosenberg’s Tom Gould said, there is less need for importers to consider electing the arrival date as the entry date for shipments due to arrive in the coming weeks.

For its part, China appears to have begun to implement a commitment to purchase a “very substantial” amount of agricultural, energy, industrial, and other products from the U.S. to reduce its trade surplus with the U.S. This includes reported commitments to buy more than one million tons of U.S. soybeans and possibly another three million tons of U.S. corn.

Further, China has reportedly said it will roll back from 40 percent to 15 percent its tariffs on automobiles and auto parts imported from the U.S. for three months, starting Jan. 1. That move would essentially suspend the tariff increase Beijing imposed earlier this year in retaliation for a U.S. tariff hike on $34 billion worth of goods from China.

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