Section 301 List 3 Tariffs Set to Increase from 10% to 25%

On Sunday, May 5th, just days before Chinese officials are set to arrive in the US to continue trade negotiations, President Trump elicited a tweet proclaiming a planned increase in Section 301 List 3 tariffs from 10% to 25%. The additional 15% increase on products falling under List 3 could occur as early as the end of this week (Friday, May 10th). The President has also threatened a future “List 4” that would tax the remaining $325 billion worth of Chinese goods that have yet to be taxed at a rate of 25%.

President Trump had previously postponed a planned increase in the tariffs in January and March of this year amidst beliefs that President Xi and China were ready to strike a new trade deal that was more favorable for the US. Though there have been numerous discussions surrounding a revised trade deal between the delegates of each country, President Trump cited slow progress as the justification for his planned increase on List 3 tariffs.

Though there is no telling if Trump’s efforts will bring a more receptive China to the negotiating table or completely obliterate any hopes of a successful agreement, the current tariffs have had little impact on product cost. However, an additional 15% in tariffs will surely raise prices for end consumers.

Thus far, the most efficient way to combat the tariffs has been via product exclusion. To date, various List 1 products have been granted exclusions, the verdict is still out on List 2 exclusions and the exclusion filing process for List 3 has yet to be released, though US Trade Rep Lighthizer has stated that the List 3 exclusion filing process and respective deadlines should be released soon.

Aside from filing exclusions, undergoing tariff engineering and/or considering alternative sourcing options outside of China, there is not much else that importers can do. However, other government officials are starting to take action. According to the NCBFAA, “In an attempt to curtail the unilateral actions by the President to increase trade barriers, Senator Mike Lee of Utah has introduced the Global Trade Accountability Act which would require both chambers of Congress to affirmatively approve of any ‘unilateral trade actions’ by the President before they could take effect.”

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