The United States will impose 25 percent tariffs on approximately $50 billion worth of goods from China in 2018 import value, mainly including industrially significant technology products spread across 1,102 U.S. tariff lines, the Office of the U.S. Trade Representative (USTR) announced Friday.
“Two sets” of U.S. tariff lines will be covered by the measures, including a first set of 818 lines — totaling $34 billion — of the original 1,333 lines included on a proposed list published on April 6, USTR said.
The second set comprises 284 tariff lines identified by the interagency Section 301 Committee as benefiting from Chinese industrial policies, including the “Made in China 2025” industrial policy, and the set covers about $16 billion worth of imports from China.
U.S. Customs and Border Protection will start to collect duties on the first set of products on July 6, USTR said.
The second set of products will undergo a public notice and comment process, including a public hearing, after which USTR will issue a final determination on the products from the list that would be subject to the duties, the agency said. USTR did not mention an expected implementation date of tariffs on the second round of tariffs, should the Trump administration move forward in imposing them.
It is difficult to predict any actions President Donald Trump might take leading up to the implementation date of the first tariff round, but the most recent signs indicate that he will follow through on imposing duties, said Bruce Hirsh, founder of Tailwind Global Strategies, a trade consultancy.
After the Trump administration in April released a list of imports from China tabbed for tariffs, a Chinese delegation visit to Washington May 17-18 ended with the United States suspending its tariff plans, before reversing that action just over a week later.
“You never know with this administration; it really depends on what President Trump decides,” Hirsh said in an interview with American Shipper.
Hirsh added that considerations related to China’s work in North Korean denuclearization discussions could play a role in Trump’s decision-making.
“But at this point, there really seems to be no indication that he has any intention about doing anything other than imposing the duties,” he said. “The paperwork from USTR this morning is pretty definitive. It refers back to [Trump’s] very definitive statements that he’s planning on imposing it, so this time around, it would be surprising if he weren’t to impose the duties.”
A meeting on Tuesday between Trump and North Korean leader Kim Jong-un concluded with a signed joint statement pledging to continue discussions aiming at denuclearizing the Korean peninsula, in exchange for the U.S. ceasing military exercises in South Korea.
Trump has, indicatively, used the modification of the Korea-U.S. Free Trade Agreement (KORUS) as a way to spur South Korea to intensify efforts toward North Korean denuclearization as well.
The revamped KORUS has remained a “deal in principle” since talks effectively concluded in March, after Trump during an April speech noted that he would “probably hold that deal up for a while” because it is a “very strong card” in fostering alignment between the United States and South Korea in the context of engaging with North Korea on denuclearization.
Widespread outcry from domestic industry is the only thing likely to force a tariff suspension akin to the one that occurred last month, said Jackie Varas, director of immigration and trade policy at American Action Forum, a conservative think tank. But throughout the administrative process for setting global tariffs on steel and aluminum imports, a large portion of U.S. domestic industry pleaded their case, and the Trump administration still followed through on 25 percent tariffs on steel and 10 percent tariffs on aluminum, Varas said.
Further, she mentioned that the Commerce Department hasn’t granted any of the 10,000 filed requests for products to be excluded from the metal tariffs imposed after an investigation pursuant to Section 232 of the Trade Expansion Act of 1962 found that steel and aluminum imports pose a threat to U.S. national security.
“If the president has shown us anything, whether it be through the campaign or since being in office, on his actions on trade, it’s that these types of unilateral actions— imposing tariffs — is his bread and butter,” Varas added. “It’s what he’s really passionate about, and it’s what he thinks will help the country, so I don’t think the weeklong delay in this original announcement of the [Section] 301 tariffs is really any reason to think that they won’t end up going through.”
Wilson Center public policy fellow Kent Hughes said another development to consider in the context of whether the U.S. follows through on its tariff proposals is the government of China’s reported approval of San Diego-based Qualcomm’s bid to acquire Dutch chip maker NXP Semiconductors, detailed by the South China Morning Post (SCMP) in a Friday morning article.
Antitrust regulators from nine countries had been required to sign off on the merger because of its potential impact on their economies, with China being the last to decide.
However, SCMP reported that it is “unclear” when the Chinese Ministry of Commerce will make an official announcement, “which may depend on other factors including progress in ongoing negotiations with Washington over outstanding trade issues.”
China could seek to use its ruling in an effort to dissuade the U.S. from acting too aggressively, if not in the context of the first tranche of tariffs, then for the second round, Hughes said.
USTR will “soon provide an opportunity” for the public to request exclusion of “particular products” from the duties to be imposed under Section 301 of the Trade Act of 1974 and will issue a notice in the Federal Register with details on this process within the next few weeks, USTR said.
An agency spokesperson confirmed that USTR will administer the product exclusion process for Section 301 tariffs.
Trump announced initial plans for the tariffs shortly after USTR on March 22 released the findings of a seven-month-long investigation that found China maintains unfair commercial practices, including forced technology transfer, against U.S. companies doing business with the country.
Section 301 provides for trade actions if the United States determines foreign countries have unfair business practices.
Trump in a Friday statement said that the United States would pursue additional tariffs if China retaliates through new duties on U.S. goods, services or agricultural products or through raising non-tariff barriers or taking punitive actions against U.S. exporters or U.S. companies operating in China.
A Chinese Foreign Ministry spokesperson during a Friday press conference vowed that his country would retaliate.
“If the U.S. takes unilateralist and protectionist moves to harm China’s interests, we will lose no time in responding to that and take necessary measures to firmly safeguard our legitimate interests,” the spokesperson said.
In his statement, Trump reiterated the findings of USTR’s report and added that the current bilateral trade relationship isn’t sustainable, despite his personal friendship with Chinese President Xi Jinping.
“China has … long been engaging in several unfair practices related to the acquisition of American intellectual property and technology,” Trump said. “These practices, documented in an extensive report published by [USTR] on March 22, 2018, harm our economic and national security and deepen our already massive trade imbalance with China.”
During a Friday call with reporters, a senior Trump administration official said that any further negative Chinese trade actions against U.S. industry “would be a mistake on their part,” but declined to comment on any Trump plans for potential further remedies.
The official added that the end goal of the tariffs is not to be punitive, but is to press China to “stop the harm that they are causing to us.”