President Trump announced Dec. 13 a phase one trade agreement with China under which the U.S. will not impose the additional 15 percent tariff on List 4B goods imported from China that was set to take effect Dec. 15. An official notice implementing this action is scheduled to be published in the Dec. 18 Federal Register.

The president said the U.S. has also agreed to reduce the additional tariff on List 4A goods from 15 percent to 7.5 percent. According to press reports, U.S. Trade Representative Robert Lighthizer said this reduction will take effect 30 days after the agreement is signed, which he said will be in early January in Washington, D.C. The 25 percent tariff on Chinese goods on lists 1, 2, and 3 will remain in place.

According to a statement from USTR, China agreed in return to “structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.” The agreement also includes a commitment by China to make “substantial” additional purchases of U.S. goods and services in the next two years, which press sources said will total $200 billion, including $40-50 billion in agricultural goods. USTR added that a “strong dispute resolution system” that apparently includes the prospect of reimposing tariffs will ensure “prompt and effective implementation and enforcement” of the agreement.

President Trump said the two sides will “immediately” begin negotiations on a phase two agreement but did not specify what issues those negotiations will address. Press reports cited Lighthizer as indicating that the U.S. plans no new tariffs as long as China continues to negotiate in good faith.

Importers of List 4A goods who are seeking exclusions from the existing 15 percent tariff should continue to do so despite the planned reduction, said trade attorney Beth Ring, a senior member of Sandler, Travis & Rosenberg, P.A. While importers could get a refund of some of the tariffs they have paid on such goods since the Sept. 1 effective date if the reduction is retroactive, Ring explained, an exclusion would enable them to recoup all such tariffs. Exclusions would also protect importers against any potential future White House decision to reinstate the 15 percent tariff.

For more information on these developments or how to request a tariff exclusion, please contact trade consultant Nicole Bivens Collinson at (202) 730-4956 or trade attorney Kristen Smith at (202) 730-4965.

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