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US follows through on latest China tariff threats

13/05/2019

US follows through on latest China tariff threats

Will Waters | Friday, 10 May 2019

Increases import duties from 10% to 25% on $200bn of Chinese goods shipped after midnight, as talks with China continue this week

 

The US has followed through with President Donald Trump’s threat earlier this week to increase import tariffs on $200bn of Chinese goods from 10% to 25%, as talks with China continue this week.

The new 25% duty will apply to more than 5,700 categories of products leaving China after 12.01 am EDT (04.01 GMT) on Friday. Cargo shipped from China before midnight were not subject to the new tax as long as they arrive in the US prior to 1 June, with those cargoes to be charged the original 10% rate, Reuters reported.

It quoted a note from investment bank Goldman Sachs stating: “This delay might create an unofficial window during which the U.S. and China can continue to negotiate,”, adding that it was a “somewhat positive sign” that talks were continuing. 

US importers have complained that Trump gave cargo shippers less than five days’ notice about his decision to increase the rate on the $200 billion category of goods, which now matches the rate on a prior $50 billion category of Chinese machinery and technology goods. He has also threatened to impose new tariffs soon.

Consultancy Oxford Economics said the increased levy could reduce US gross domestic product (GDP) by 0.3% and China’s by 0.8% in 2020, Reuters reported. 

Mats Harborn, president of the European Union Chamber of Commerce in China, said: “A quarter of our members have exports to the US that were already affected by these ridiculous tariffs,” Reuters reported. “Pushing rates to 25% will prove extremely damaging to those companies, and the collateral damage will ripple around the globe.

“European companies are watching aghast as the US and China play Russian roulette with the world economy.” 

Analysts expect China to increase non-tariff barriers on US companies, such as delaying regulatory approvals, as it cannot not hit the same amount of imported US goods with higher tariffs. 

The biggest Chinese sector affected by the latest tariff increase is a $20 billion-plus category of internet modems, routers and other data transmission devices, followed by about $12 billion worth of printed circuit boards used in a vast array of US-made products, Reuters highlighted. Furniture, lighting products, auto parts, vacuum cleaners and building materials are also high on the list of products subject to higher duties. 

Freight forwarding and logistics companies said they have been monitoring the developments and have been in close contact with key customers about the implications of the latest moves in the US-Chain tariff war.

In a note to customers on Wednesday, the US Trade Services arm of global logistics group Geodis warned its partners of the planned rise, highlighting that the Office of the Trade Representative is planning to publish a notice officially changing the rate of trade remedy tariff for goods in the Tranche III from 10 to 25%. Is said this notice “has two critical components regarding the applicability of the increase”, noting: “The rate change is to be effective with respect to goods in the Tranche III:

Entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019; and

Exported to the United States on or after May 10, 2019.”

It highlighted that cargo owners may have in-transit goods that will not be subject to the higher tariff, noting: “Determining if your merchandise is subject to the 10% rate or the increased 25% rate may be impacted by the date of export and the entered date.” The country of exportation is the country of which the merchandise was last part of the commerce and from which the merchandise was shipped to the US without contingency of diversion, it clarified. 

“Date of exportation, or the ‘time of exportation’ referred to in section 402, Tariff Act of 1930, means the actual date the merchandise finally leaves the country of exportation for the United States. For entry purposes, the date of export is recorded as the date the carrier departs from the last port in the exporting country.” 

For overland shipments, e.g. from Canada, Mexico or land-locked countries where the port of lading is outside the exporting country, the date the exporting carrier crossed the border from the exporting country is used, it said.
 
Geodis added: “It is important to work with your carrier for accurate export and arrival dates and then coordinate with your  Account Representative so the appropriate rate is paid. It is likely that CBP will require evidence of exportation or arrival dates, should there be any doubt as to the applicable rate.” 

It said the CBP regulations provide for the centre director to verify, “by all reasonable ways and means in his power, and in so doing may consider dates on bills of lading, invoices, and other information available to him”. The notice also states that the USTR will be issuing a separate notice with instructions on how to apply for a product exclusion from the Tranche III duties. 

 

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