Tariff Update—Importers Will Now Pay Tariffs on $250 Billion of the $500 Billion in Chinese Goods Coming to the U.S. Every Year

On September 17, the President directed the U.S. Trade Representative (“USTR”) to impose additional tariffs on importers of Chinese goods. The official statement is available here.    

To recap, this is the third tranche of tariffs on imported Chinese goods. The first tranche, which we blogged about here, went into effect on July 6, and covered 818 tariff schedule categories. To request an exclusion from the tranche one tariff increase, an importer must file its request with the Office of the USTR by October 9, 2018. More details are provided here.

The second tranche went into effect on August 23, and covered 279 tariff schedule categories. For tranche two, the USTR recently announced the exclusion request process, with exclusion requests due by December 18, 2018. The Federal Register notice setting forth the specific procedures and criteria for tranche two exclusion requests is available here.

Now, based upon the President’s September 17 statement, tranche three is going into effect on Monday, September 24, 2018. The tranche three list includes 6,031 tariff categories, covering a wide variety of goods including – literally – the proverbial kitchen sink (HTS subheading 7324.10.00 “Sinks and wash basins, of stainless steel” on page 171). Consequently, for tranche three, importers will pay a tariff increase of an additional 10% ad valorem (according to the value of the article) until January 1, 2019. Thereafter, importers will pay an additional 25%.

Notably, the President’s September 17 statement also provided that “if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”  Donald J. Trump, Statement from the President (Sept. 17, 2018). Given that, on Tuesday, September 18, the Chinese Government stated that it will impose new tariffs on $60 billion worth of imported American goods, it looks like the President may go forward with a fourth tranche of tariffs. If that occurs, it will make the U.S. tariffs on imported Chinese goods virtually all-encompassing.

This blog was written by Karl Means and Jason Blindauer at Miles & Stockbridge.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.