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Client Alert – USTR Announces Tariff Increase from 10% to 25% for all Round 3 Section 301 products from China — And China Announces its Retaliatory Measures

By V. Susanne Cook, Esq., Steven A. Harris, Esq. and
Megan Finkelstein, Customs & Trade Consultant

TIMING OF INCREASE OF TARIFFS FROM 10% TO 25%:  In a notice published September 21, 2018, the U.S. Trade Representative (“USTR”) announced the imposition of the additional duties on certain products from China with an approximate annual trade value of 200 billion U.S. Dollars (“Round 3 Products”). At that time the applicable rate of duties was 10%. In a Federal Register Notice dated May 9, 2019, USTR has now increased the applicable rate for Round 3 Products to 25% effective for all Round 3 Products that are (1) entered on or after 12:01 a.m. (EST) on May 10, 2019 and (2) exported to the United States on or after May 10, 2019. While the term “export” remains undefined at this point and some ambiguity may exist in particular cases, the practical effect appears to be that Round 3 Products that were in transit on the water or in the air en route to the United States on May 10, 2019, may be excluded from the tariff increase. This offers a brief window for U.S. importers of Round 3 Products to explore potential commercial solutions or mitigation procedures to lessen the impact of this increase. Please feel free to contact a member of the Cohen International Business Group for assistance with the exploration of planning opportunities for imports of Round 3 Products.

ROUND 3 PRODUCT EXCLUSION PROCESS TO BE ANNOUNCED:  In the May 9, 2019 announcement, USTR stated that it will establish an exclusion process for all Round 3 Products. An exclusion process had previously been established for Round 1 Products, as well as Round 2 Products. The exact process and mechanics for the Round 3 Products has not been established, but we would expect a process that is similar to the previous exclusion procedures, with tweaks that are reflective of lessons learned from the previous exclusion submissions. Another open issue for the Round 3 Product exclusion procedures is whether an exclusion request is retroactive to the date of the tariff increase to 25% only, or if a request is able to seek relief back to September 2018 when the initial increase to 10% was announced. As this unfolds, the Cohen International Business Group will provide additional Client Alerts.

PROSPECTS OF A NEW ROUND 4 PRODUCT LIST AND CHINESE RETALIATORY MEASURES:  In a tweet on May 5, 2019, President Trump signaled that additional tariffs could be imposed on the remaining 325 Billion Dollars of Chinese goods that are currently without Section 301 tariffs. As before in response to previous rounds of U.S. tariff increases, China enacted its own retaliatory regime today by increasing tariffs on a wide range of U.S. goods from the current 5% to 10% tariff to 20% to 25%, but left some room for negotiation by targeting an implementation date of June 1, 2019. The Chinese retaliatory measures affect approximately 5,000 products, mostly food items and chemicals.  Again, as this unfolds, the Cohen International Business Group will provide additional Client Alerts.

If you have any questions about any of the above information, or wish to discuss a particular matter, please feel free to speak with any member of our International Business Practice by calling us at 412-297-4900 or visiting https://www.cohenlaw.com/practices/international-business. To receive future client alerts, please send an e-mail to bulletins@cohenlaw.com.

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