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Tariff Update - Trade War Drums Grow Louder

September 21, 2018

The Trump administration announced Monday that the U.S. will impose a 10 percent tariff on $200 billion more of Chinese goods, effective Sept. 24th. The duty will rise to 25 percent effective on Jan. 1 with the possibility of an additional target of $267 billion worth of Chinese goods if China retaliates.

The latest $200 billion worth of imports comes in addition to the $50 billion already in place. Tariffs on China are being imposed over intellectual property concerns under Section 301 of the Trade Act of 1974 .

For its part, China has said it would retaliate on an additional $60 billion worth of U.S. exports, bringing its total to around $113 billion if Trump proceeds. It will target more than 5,200 types of goods that it imports including liquefied natural gas and honey.

China’s retaliatory tariffs, on items ranging from meat to wheat and textiles, will take effect on Sept. 24, China’s Ministry of Finance said in a statement posted on its website. Beijing is still ready to negotiate an end to the trade tensions with the U.S., the ministry said.

U.S. concern stems from the Chinese government’s Made in China 2025 plan to foster advanced industries, such as aerospace and robotics. The Office of the U.S. Trade Representative (USTR) says the plan relies on acquisition of advanced technologies developed elsewhere.

The South China Morning Post reported Tuesday that China will probably cancel its plans to send Xi's top economic adviser to Washington in light of the latest tariff action, citing a government source.

Office of the United States Trade Representative (USTR) today released a list of approximately $200 billion worth of Chinese imports that will be subject to additional tariffs. 

The Trump administration tailored its final list of Chinese targets to help ensure American consumers don’t feel the pinch, Commerce Secretary Wilbur Ross said Tuesday.

“We were trying to do things that were least intrusive on the consumer," Ross said on CNBC. “We really went item-by-item trying to figure out what would accomplish the punitive purpose on China and yet with the least disruption in the U.S."

Trump’s latest announcement brings the total amount of Chinese goods hit with tariffs to about $250 billion, or roughly half of the $505 billion that the United States imported from China last year.

Please see a breakdown from Bloomberg on Section 301 tariffs and retaliation.

USTR is currently accepting exclusion requests for the first set of tariffs with a deadline of Oct 9, and for the second set with a deadline of Dec 18. The agency is expected to release a similar process for the third set as well.

In a last-minute bid to prevent further tariff escalation, Treasury Secretary Steven Mnuchin last week invited Chinese Vice Premier Liu He to Washington for more talks. However, Trump’s decision to proceed with more tariffs adds uncertainty to that effort. The Chinese Foreign Ministry spokesman cautioned that additional duties do not help discussions.

Although Trump hasn’t endorsed negotiations, China is reportedly considering sending representatives to Washington later in September.

As always, we will continue to monitor this and update you accordingly. If you would like more information on the topics above please email matthew.majure@arlaw.com.