“Knowledge is Power.”

– Sir Francis Bacon

 

If Sir Francis’ wisdom always held true, Shapiro would benevolently rule all the world’s creatures, great and small, since we possess over a century of hard-won knowledge and expertise in Customs and international trade compliance. Fortunately for you, we are not power hungry – only hungry enough to empower you with the solid knowledge and powerful perspectives you need to prosper and grow during the first real trade war in generations.

Ask yourself:

  • In what ways are your company and the competition being affected by the imposition of additional tariffs under Section 301?
  • How will these additional costs and hurdles cut into your bottom line profitability?
  • How can an importer respond to these tariffs? What are my options?

What better time than now to leverage Shapiro’s vast knowledge and experience as you attempt to digest the complexities and uncertainties surrounding the imposition of significant additional tariffs, which will undoubtedly complicate and likely obstruct your pathway to healthy profits?


The Section 301 Tariffs: U.S. Timeline

March 8, 2018: Trump announces $50 billion worth of tariffs on Chinese imports in response to alleged theft of U.S. intellectual property (IP) and technology violations effective March 23, 2018.

March 22, 2018: President Trump begins pushing for the addition of Section 301 tariffs on China in response to continued intellectual property violations and reveals plans to target more than 1,300 Chinese goods.

April 2, 2018: China announces tariffs on 128 food and beverage products from the U.S. in retaliation of steel and aluminum tariffs imposed by Trump in March; 15% tariffs will be applied to 120 items — such as fruits, nuts and wines; 25% tariffs will be applied to 8 products – including pork and scrap aluminum.

April 4, 2018: U.S. Trade Representative (USTR) publishes an official notice in the Federal Register requesting public comments on a proposed list of 1,333 HTS subheadings of Chinese imports, valued at $50 billion in annual trade – potentially subject to additional 25% duties.

May 29, 2018: U.S. confirms the final list of Chinese products subjected to additional 25% tariffs is in the works and will be completed by June 15th.

June 15, 2018: USTR announced the imposition of List 1 and List 2 tariffs on $50 billion of Chinese imports that contain “industrially significant technologies” in a two-step approach. First, additional 25% duties would be levied on $34 billion of Chinese goods, covered in List 1, would begin effective July 6th; click here to view the list of 818 HTS product subheadings such as machinery, manufacturing inputs, elevators and aircraft parts. Second, the USTR would hold public hearings to determine whether 25% duties will be levied on another $16 billion worth of Chinese products outlined in List 2 but didn’t set an effective date; click here to view the proposed list of 284 HTS subheadings; China announced List 1 retaliation tariffs would add 25% duties on $34 billion of U.S. goods, including soybeans, automobiles and various chemicals, effective July 6. The list of 545 U.S. products subjected to the new List One retaliatory tariffs can be found by clicking here.

June 18, 2018: Trump responds to Chinese retaliatory tariffs by announcing the possibility of additional List 3 tariffs, consisting of 10% duties (initially) on $200 billion of Chinese goods that will go into effect pending a two-month review by the USTR. Click here to view the list of proposed 6,031 HTS subheadings.

June 20, 2018: USTR publishes official List 1 notice (USTR-2018-0018)  in the Federal Register to outline all necessary guidelines and requirements surrounding comment submissions:

  • June 29, 2018: Due date for filing requests to appear and a summary of expected testimony at the public hearing and for filing pre-hearing submissions.
  • July 23, 2018: Due date for submission of written comments.
  • July 24, 2018: The Section 301 Committee will convene a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436 beginning at 9:30 a.m.
  • July 31, 2018: Due date for submission of post-hearing rebuttal comments.

July 10, 2018: USTR releases plans to create a process for importers to apply for product exclusions for List 1 goods.

July 11, 2018: USTR announced List 2 noticepublished on July 17th under USTR-2018-0026  in the Federal Register – to outline all necessary guidelines and requirements surrounding comment submissions:

  • July 27, 2018: Due date for filing requests to appear and a summary of expected testimony at the public hearing, and for filing pre-hearing submissions.
  • August 17, 2018: Due date for submission of written comments.
  • August 20-23, 2018: The Section 301 Committee will convene a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436 beginning at 9:30 a.m.
  • August 30, 2018: Due date for submission of post-hearing rebuttal comments.

August 3, 2018: Trump considers increasing List 3 tariff rates from 10% to 25% as an added encouragement for China to expedite fairer trade policy changes. The comment period for importers to submit List 3 products is extended to September 6th. China announced that it would follow suit by also implementing additional 25% tariffs on $16 billion worth of U.S. goods effective August 23, 2018. A list of all 333 U.S. products, including coal, copper scrap, fuel, buses and medical equipment affected by the List Two retaliation can be found here.

August 7, 2018: USTR publishes its finalized List 2, containing 279 HTS codes on $16 billion of Chinese products subject to 25% duties effective August 23, 2018. The latest version closely mirrors the initial List 2 proposal, this final iteration excludes 5 HTS codes – 3913.10.00, 8465.96.00, 8609.00.00, 8905.90.10 and 9027.90.20.

September 18, 2018: USTR released an official process for importers to apply for product exclusions for List 2 goods.

September 21, 2018: USTR publishes its finalized List 3, containing 5,745 HTS codes on $200 billion of Chinese products subject to 10% duties effective September 24, 2018. Trump also threatened to raise duties up to 25% in early 2019, in addition to a potential List 4, which would tax the remaining $325 billion worth of Chinese goods that have yet to be taxed at a rate of 25%, should China retaliate further; China responded with tariffs of 5-10% on an additional 5,207 products, totaling $60 billion worth of goods effective September 24, 2018 and targeted agricultural equipment, machinery, chemicals and textiles.

September 28, 2018: USTR publishes an amended List 3 notice adding (38) new HTS subheadings and removing (14) subheadings to the initial list of items subject to 10% duties (published September 21st.) effective October 1, 2018.

December 3, 2018: President Trump reveals List 3 tariffs, which were set to increase from 10% to 25% effective January 1, 2019, would remain at 10% for an additional 90 days, as a result of fruitful talks with Chinese President Xi Jingping at the G20 summit in Buenos Aires.

December 21, 2018: USTR releases its 1st round of product exclusions. The official notice contains (7) HTS subheadings completely excluded from List 1 tariffs (25%) and (15) partially excluded HTS subheadings.

February 24, 2019: President Trump announces another postponement of increased duties on List 3 tariffs just days before the 90-days were due to expire, again as a result of positive and successful talks between the countries, and reported his intention to plan a summit “to conclude an agreement” on U.S. soil in the weeks following.

March 20, 2019: USTR releases its 2nd round of product exclusions. The official notice contains (3) HTS subheadings completely excluded from List 1 tariffs (25%) and (30) partially excluded HTS subheadings.

April 15, 2019: USTR releases its 3rd round of product exclusions. The official notice contains (21) partially excluded HTS subheadings from List 1 tariffs (25%), covering 348 separate import requests.

May 5, 2019: Just days before Chinese officials were set to arrive in the US to continue trade negotiations, President Trump elicited a tweet proclaiming a planned increase in List 3 tariffs from 10% to 25% effective 12:01 am on May 10th (based on date of export) —  in other words any goods exported before May 10th will remain subject to 10% and anything exported from May 10th or later will be subject to 25%.

May 9, 2019: USTR releases its 4th round of product exclusions. The official notice contains (5) HTS subheadings completely excluded from List 1 tariffs (25%) – covering 86 separate import requests – and (35) partially excluded HTS subheadings – which cover another 429 requests respectively.

May 17, 2019: China announces a new batch of retaliatory tariffs on 5,140 U.S. exports, totaling $60 billion, in response to the 15% increase (from 10 to 25%) in tariffs on List 3, as well as a proposed List 4; USTR publishes a new notice (USTR-2019-004) in the Federal Register asking for public commentary on approximately 3,805 HTS subheadings, totaling $300 billion in annual imports from China, being considered for an additional 25% duties on List 4, and provided all necessary guidelines and requirements surrounding comment submissions:

  • June 10, 2019: Due date for filing requests to appear and a summary of expected testimony at the public hearing.
  • June 17, 2019: Due date for submission of written comments.
  • June 17, 2019: The Section 301 Committee will convene a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, that begins at 9:30 a.m.
  • Seven days after the last day of the public hearing: Due date for submission of post-hearing rebuttal comments.

May 21, 2019: USTR released an official process for importers to apply for product exclusions for List 3 goods.

May 31, 2019: The USTR announced that goods shipped prior to May 10th that fall under List 3 will NOT be subjected to the additional 15% in duties if they arrive before June 15th.

June 3, 2019: USTR releases its 5th round of product exclusions. The official notice contains (1) HTS subheading completely excluded from List 1 tariffs (25%), and (88) partially excluded HTS subheadings, which cover another 464 requests respectively.

June 14, 2019: As the one-year anniversary of Section 301 approaches, members of Congress request automatic extensions on List 1 products that have already been granted exclusions from the USTR before they expire.

June 29, 2019: U.S. and China restarted trade negotiations during an enthusiastic meeting between President Trump and President Xi at the G20 summit in Osaka, Japan. The round of trade talks ended with China’s agreement to immediately increase its purchase of U.S. farm and agricultural products; while the US agreed to temporarily postpone List 4 tariffs and lifted certain sanctions put in place against Chinese telecom giant Huawei. Additional 25% tariffs on Lists 1, 2 and 3 would remain in effect.

July 8, 2019: USTR releases its 6th round of product exclusions. The official notice contains (110) HTS subheadings partially excluded from List 1 tariffs (25%), which cover another 369 requests respectively.

July 29, 2019: USTR releases its 7th round of product exclusions. The official notice contains (69) HTS subheadings partially excluded from List 2 tariffs (25%), which cover another 292 requests respectively.

August 1, 2019: Trump revealed that the U.S. will begin levying 10% duties on List 4 products, as opposed to the originally threatened 25%, effective September 1st  as a result of China’s failure to uphold its commitments to increase its purchase of U.S. agricultural imports and to cease its fentanyl exports to the U.S. Trump also threatened to make “no deal at all” should significant progress not be made between the countries, but said the US will continue to participate in trade negotiations with China.

August 5, 2019: USTR releases its 8th round of product exclusions. The official notice contains (10) HTS subheadings partially excluded from List 3 tariffs (10% and 25%), which cover 15 requests respectively.

August 13, 2019: USTR published an official notice (dated August 20th) revealing certain list 4 products would be exempt from additional 10% tariffs until December 15th. List 4A includes items such as food, beverages, chemicals, glasses, blinds and clothing subject to additional duties effective September 1st; List 4B includes roughly 600 HTS codes covering electronics, chemicals, food, sports equipment, clothes, wooden hangers, as well as many other popular holiday items subject to additional duties effective December 15th.

August 15, 2019: USTR issued a notice advising importers that additional 10% tariffs on List 4A and 4B Chinese goods would be applied based on the entry date—which is the date the cargo arrives in U.S Customs territory or the date the Customs entry is filed, whichever is later.

August 23, 2019: President Trump which vowed to increase List 1, 2 and 3 tariffs on $250 billion worth of Chinese goods from 25% to 30% effective October 1st after China announced the imposition of retaliatory tariffs on $75 billion worth of U.S. products. He also revealed that the List 4A tariffs, set to take effect on September 1st, and the List 4B tariffs, which would be effective mid-December, would be increased from 10% to 15%. The USTR advised importers that the rate increases WOULD NOT affect any exclusions that have already been granted for List 1, 2 and 3.

September 3, 2019: USTR publishes a new notice (USTR-2019-0015) in the Federal Register asking for public commentary on proposed List 1, 2 and 3 tariff rate increases (from 25% to 30%) scheduled to take effect October 1st.

September 11, 2019: President Trump decided to push the planned October 1st tariff increase on List 1, 2 and 3 until October 15th, in honor of the People’s Republic of China’s 70th anniversary celebration and to match a similar conciliatory move that granted a one-year exemption from Chinese tariffs for 16 U.S. products.

September 18, 2019: USTR releases its 9th round of product exclusions.

  • The List 1 notice contains (310) HTS subheadings partially excluded from List 1 tariffs (25%), which cover 724 separate requests.
  • The List 2 notice contains (89) HTS subheadings partially excluded from List 2 tariffs (25%), which cover 400 separate requests.
  • The List 3 notice contains (38) HTS subheadings partially excluded from List 3 tariffs (25%), which cover 46 separate requests.

September 30, 2019: USTR releases its 10th round of product exclusions.

  • The List 1 notice contains (92) HTS subheadings partially excluded from List 1 tariffs (25%), which cover 129 separate requests.
  • The List 2 notice contains (111) HTS subheadings partially excluded from List 2 tariffs (25%), which cover 382 separate requests.

October 11, 2019: Trump postpones additional tariff increase (from 25-30%) on certain List 1, 2 and 3 items scheduled to begin on October 15th as a result of China’s progress in addressing U.S. IP concerns, in addition to their willingness to purchase an additional $40 to $50 billion worth of American commodities.

October 21, 2019: USTR announced plans to open an electronic portal for the submission of List 4A exclusion requests beginning October 31st. The USTR portal will close on January 31st, 2020.

October 24, 2019: USTR releases its 11th round of product exclusions. The notice contains (83) HTS subheadings partially excluded from List 3 tariffs (25%), which cover 95 separate requests.

November 8, 2019: USTR releases its 12th round of product exclusions. The notice contains (34) HTS subheadings partially excluded and (2) HTS subheadings completely excluded from List 3 tariffs (25%), which cover 42 separate requests.

Please note:

  • Amid shifting tensions between U.S. and Chinese officials, the USTR has continued to advise, evaluate and process List 1, List 2 and List 3 importer exclusion filing requests. More information on the HTS subheadings excluded thus far is provided below in the Section 301 Reference Chart – U.S. Tariffs.
  • USTR created a site designed to help importers navigate the Section 301 tariff process, including an HTS search tool, along with other helpful features.

Section 301 Reference Chart – U.S. Tariffs (Importers)

Here’s a quick snapshot of the details and important dates surrounding all of the U.S. tariffs:

Covered Products

 

Current Tariff Rate

Relevant Dates
List 1 818 products – machinery, manufacturing inputs, elevators, aircraft parts 25%
List 2 279 products – soybeans, automobiles and chemicals 25%

 

List 3

 

5,745 products – food, beverages, chemicals, wood, fabrics

 

25%

 

List 4 3805 products – electronics, sports equipment, clothes, wooden hangers, food, beverages, chemicals, glasses, blinds, clothing 15%

 


Yes, China has responded – with some tariffs of its own!

China’s response to all rounds of 301 tariffs imposed by the U.S. was swift, with President Xi Jinping approving tit-for-tat retaliatory tariffs. China’s response appears to target the populations they consider to be the Trump administration’s core supporters – U.S. farmers, ranchers and industrial workers.

Let’s take a closer look at the retaliatory tariffs and their targets:

June 15, 2018: China Tariff Commission announced List 1 retaliation tariffs on certain U.S. products, including soybeans, automobiles and various chemicals. List One retaliatory tariffs added 25% duties on $34 billion of U.S. goods effective July 6, 2018. The finalized list of 545 U.S. products subjected to the new tariffs can be found by clicking here.

August 7, 2018: China announced that it would follow suit with US List 2 by also implementing additional 25% tariffs on $16 billion worth of U.S. goods effective August 23, 2018 in retaliation. A final list of all 333 U.S. products, including coal, copper scrap, fuel, buses and medical equipment affected by the list two retaliation can be found here.

September 21, 2018: In response to List Three, China issued tariffs of 5-10% on an additional 5,207 products, totaling $60 billion worth of goods. These tariffs went into effect on September 24, 2018 and targeted agricultural equipment, machinery, chemicals and textiles. List Three included several retaliatory waves. A full breakdown of list three retaliations can be found by selecting phase onetwothree or four. China paired these tariffs with published government documents that further express their bleak stance on the future of U.S.-China trade.

May 13, 2019: China announced a new batch of retaliatory tariffs on 5,140 U.S. exports, totaling $60 billion, in response to the 15% increase (from 10 to 25%) in tariffs on List 3 products, as well as the proposition of a List 4.Effective June 1, an additional 25% tariff on 2,493 items, 20% tariff on 1,078 items, 10% tariff on 974 items to commence, as well as the continuation of a 5% tariff on 595 items.

August 23, 2019: Following President Trump’s announcement of an additional List 4A and 4B duties, China countered with plans to levy additional tariffs, ranging from 5% to 10%, on $75 billion of U.S. soybeans, automobiles and oil effective September 1st and December 15th.

September 10, 2019: Trump’s decision to postpone (yet again) to match a similar conciliatory move made by Chinese officials the day prior, which granted a one-year exemption from Chinese tariffs for 16 U.S. products. Trump later postponed the additional rate increase just days before October 15th.


Section 301 Reference Chart – Chinese Tariffs (Exporters)

Here’s a quick snapshot of the details and important dates surrounding the Chinese retaliatory measures:

Covered Products

 

Current Tariff Rate

Relevant Dates
First Round

 

545 products – soybeans, automobiles, various chemicals

 

25%

 

  • Effective 7/6/18
Second Round 333 products – coal, fuel, buses, medical equipment 25%
  • Effective 8/23/18
Third Round 5,207 products – agricultural equipment, machinery, and textiles 5% – 10%  

  • Effective 9/28/18

 

Fourth Round 5,140 products – agricultural 5% – 25%

 


Carrier Response to Section 301

With the peak summer season heating up, the OCEAN Alliance, including CMA (and APL), COSCO (and OOCL) and Evergreen, announced plans to remove approximately 35,000 TEUs from 3 voided sailings in its Trans-Pacific trade lane this July.

The newest wave of cancellations follows nearly 25,000 TEUs of voided sailings in June, 10 sailings from March to April, on top of the 22 West Coast bound services and 13 East Coast bound services initially removed in February and early March in response to struggles with balancing supply and demand, bringing ocean transit reliability to a record low of 40%.

The decision to void sailings comes amid declining demand due to the low volume of Chinese imports resulting from Section 301 cargo front-loading, as well as the decrease in Eastbound Trans-Pacific spot rates from Asia to the West Coast.

According to Alphaliner, there will likely be additional void sailings announced in the coming weeks, as well as in the 4th quarter, as carriers remove ships from service ahead of the IMO’s January 1st low sulfur mandate.

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