Additional Section 301 List 3 Tariffs Postponed Amidst ‘Strengthening’ U.S. – China Relations

On Sunday, February 24th, President Trump announced the postponement of increased duties on Section 301 List 3 tariffs as a result of positive and successful talks between China and the U.S. in regard to trade relations. Tariffs on Section 301 List 3 items worth over $200 billion were set to escalate from 10% to 25% effective March 2nd should initial talks between China and the U.S. have proven unfruitful.

Though the postponement of tariffs may substantiate the claim that adequate progress has been made in China – U.S. negotiations, the deferment of increased tariffs should not be viewed as definitive. The White House could implement increased tariffs at a later date as a new timeline for negotiations has yet to be announced. However, many pundits feel that President Trump is now more eager than ever to reach a deal with China in light of a slowing U.S. economy and his looming 2020 reelection campaign.

President Trump also reported his intention to plan a summit at Mar-a-Lago with President Xi Jinping “to conclude an agreement” based on the state of trade negotiations in the coming weeks. A date for this meeting has yet to be set.

So, what is important for me to know as an importer?

  • Despite progress, the existing 10% tariffs on Section 301 List 3 products are likely to remain in effect for the foreseeable future, so plan your forecasts and orders accordingly.
  • Section 301 List 1 and List 2 tariffs are still in full effect.
  • If you have taken action to steer production away from China to avoid the tariffs, please be careful in ensuring that any goods produced in another country do not contain raw materials that were sourced from China. Customs and Border Protection (CBP) has made it clear that they will be heavily investigating goods that still have a connection to Chinese production in order to appropriately assess duties.

Shapiro will continue to monitor the situation and provide further updates as they become available.