The Office of the U.S. Trade Representative (USTR) on Tuesday announced plans to levy 10 percent tariffs on goods from China totaling $200 billion in annual import value, after that country on Friday imposed retaliatory tariffs in response to an initial round of U.S. tariffs of 25 percent across $34 billion worth of goods in yearly import value.
The $200 billion would follow another planned round of tariffs on $16 billion worth of Chinese goods in yearly import value.
All these planned tariffs have been cited as a response to a USTR-led investigation into China’s trade practices pursuant to Section 301 of the Trade Act of 1974, which found unfair business and intellectual property transfer practices by the nation.
The interagency Section 301 Committee will hold a hearing at the International Trade Commission in Washington on the proposed tariffs across $16 billion worth of Chinese goods across 284 tariff lines on July 24, and will hold another hearing on the tariffs proposed against $200 billion worth of Chinese goods at the ITC Aug. 20 to 23.
The deadline for prehearing comments on the proposed $200 billion worth of tariffs is Aug. 17, and Aug. 30 is the deadline for post-hearing rebuttal comments, with any of the tariffs presumptively to be imposed afterward. Requests to appear at the Aug. 20-23 hearing must be submitted by July 27.
The proposed 10 percent tariffs cover 6,031 tariff subheadings.
President Donald Trump instructed USTR to start imposing the tariffs, U.S. Trade Representative Robert Lighthizer said in a statement Tuesday. The United States remains willing to engage in efforts that could yield a resolution of U.S. concerns about China’s unfair business practices, but China has not improved its business practices up to this point, Lighthizer said.
“For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market and engage in true market competition,” Lighthizer said. “We have been very clear and detailed regarding the specific changes China should undertake. Unfortunately, China has not changed its behavior — behavior that puts the future of the U.S. economy at risk. Rather than address our legitimate concerns, China has begun to retaliate against U.S. products. There is no justification for such action.”
During a conference call with reporters Tuesday, a senior Trump administration official declined to say specifically what actual steps the United States is looking for China to take regarding trade.
“They’ve continued to deny that we’re being hurt by the things that we’ve identified in our [Section 301] report [released in March], and they’ve continued to insist that if we do anything to try to encourage them to change their behavior, that they will just launch more attacks on the U.S. market,” that official said. “I can’t sort of say what we would be looking for, but I think it’s pretty obvious that that’s the sort of reaction that no one’s looking for.”
China has been “pretty blunt” that they aren’t prepared to talk about “Made in China 2025” and about “some of the structural things that we’ve talked about,” the official said.
Some of the tariffs apply to products generated from “Made in China 2025” sectors and are designed to limit impacts to U.S. consumers and the U.S. economy, that official said.
The official defended the Trump administration’s decision to levy the Section 301 tariffs even after China targeted U.S. agricultural products in its first round of retaliation, noting that overall U.S. agricultural exports were higher year over year during the first five months of 2018 and that the administration will continue to take action to promote U.S. agriculture.
The proposed tariffs to cover $200 billion worth of goods are aimed, in part, to “enhance effectiveness,” as Chinese tariffs on U.S. exports cover a “substantial percentage” of U.S. goods exports.
The U.S. exported $130 billion worth of goods to China last year, while China exported $505 billion to the United States.
“In order to enhance effectiveness, the level of the U.S. supplemental action must cover a substantial percentage of Chinese imports,” the USTR notice says.
Any merchandise subject to increased tariffs admitted into a foreign trade zone on or after the effective date of the increased tariffs, except those eligible for admission under “domestic status,” would have to be admitted as “privileged foreign status” and would be subject to additional duties upon entry for consumption, USTR said.
Comments should touch on topics including whether imposing duties on a particular product would cause “disproportionate” economic harm to U.S. interests, including small or medium-sized businesses and consumers, USTR said.
At first glance, the proposed tariffs list appears to target agriculture and aquaculture products from China, including fish, vegetables, fruits, nuts, starchy products, condiments, juice and tobacco products, as well as several chemicals and raw materials, fragrances and toiletries.
The senior administration official said some of the goods on USTR’s list were recommended as a direct response to goods included on China’s retaliation list.