Trade and tariff issues are a priority on the IHA’s government affairs agenda, with tariffs on China being the main concern. Hopefully, a “phase one” deal between the U.S. and China can be finalized to bring some relief from the 16-month trade war that’s disrupted global supply chains, but until a deal happens the tariff exclusion process and/or sourcing alternatives to China are the available options.
The U.S. Trade Representative (USTR) found that China restricts U.S. commerce under §301(b) of the 1974 Trade Act, triggering 25% tariffs on Chinese products beginning in 2018 with an annual trade value of $250 billion rolled out in three lists covering over 6,000 products. List 3 tariffs started May 10, 2019 on $200 billion of Chinese imports, followed by 10% tariffs for additional List 4 products (Lists 4A and 4B) with an annual trade value of $300 billion.
List 4A started Sept. 1 and 4B starts Dec. 15 unless there’s a phase one deal. Tariffs were also increased August 23, raising Lists 4A-4B to 15% on Sept. 1 and Dec. 15, and Lists 1-3 to 30% on Oct. 1. However, the U.S. suspended the Lists 1-3 increase to facilitate phase one negotiations, but the original 25% tariffs are in place along with the Lists 4A-4B increases.
USTR’s product exclusion process for List 4A is in effect from Oct. 31, 2019 – Jan. 31, 2020, and requests must be filed through USTR’s exclusion portal. The exclusion process is closed for Lists 1-3 and the List 4B portal is expected to open after those tariffs start Dec. 15, 2019.