On June 15, the Office of the United States Trade Representative (USTR) issued a press release announcing its intent to impose additional tariffs on products imported from China. The additional tariffs are part of the U.S.’ response to China’s unfair trade practices related to “the forced transfer of American technology and intellectual property” pursuant to Section 301 of the Trade Act of 1974.

Two lists of tariff lines were released. The first list includes 818 of the original 1,333 lines and is valued at $34 billion worth of imports from China. Products falling under these tariff lines will see an additional duty of 25 percent beginning on July 6.

The second list consists of 284 new tariff lines identified by the interagency Section 301 Committee as “benefiting from Chinese industrial policies, including the “Made in China 2025” industrial policy.”

These 284 lines cover approximately $16 billion worth of imports from China. This list will undergo further review in a public notice and comment process, including a public hearing. After completion of this process, USTR will issue a final determination on the products from this list that would be subject to the additional duties.

 

Section 301 For covered products in List 1, please click here.

For covered products in List 2, please click here.

25%

 

TBD

7/6/2018

 

TBD

Status: List 1 is composed of 818 of the original 1,333 tariff lines, and goes into effect on 7/6/2018.

List 2 is composed of 284 proposed tariff lines identified by the interagency Section 301 Committee. These will see further review, to include a public hearing.

For full details, please click here.

Last updated on 6/15/2018: added new U.S. Section 301 tariffs; added translated version of Mexican retaliatory measures and updated Mexico section.

U.S. Trade Actions

Action Covered Products Rate Increase Effective Date
Section 232 Steel and Aluminum Steel – 25%
Aluminum – 10%
6/1/2018
Status: Steel – all countries of origin except South Korea, Brazil, and Argentina (agreed to quotas); and Australia (exempted).

Aluminum – all countries of origin except Argentina (agreed to quota); and Australia (exempted).

Section 232 Autos and Automotive Parts TBD TBD
Status: For the latest status, please click here.
Section 301 For covered products in List 1, please click here.

 

For covered products in List 2, please click here.

25%

 

 

TBD

7/6/2018

 

 

TBD

Status: List 1 is composed of 818 of the original 1,333 tariff lines, and goes into effect on 7/6/2018.

List 2 is composed of 284 proposed tariff lines identified by the interagency Section 301 Committee. These will see further review, to include a public hearing.

For full details, please click here.

Retaliatory Actions

Canada For covered products, please click here. Table 1 – 25%
Table 2 – 10%
7/1/2018
Status: Canadian companies/industry associations have until 6/15/2018 to submit comments supporting or expressing concern about items on the list.
EU For covered products, please click here. Annex I – 10% or 25%
Annex II – 10% – 50%
Annex I – 7/1/2018 (tentative);
Annex II – 3/23/2018 or 5th day after WTO Dispute Settlement Body rules against the U.S. action, whichever is first.
Status: For the latest status, please click here.
Mexico For the translated list of covered products, please click here. 7% – 25% (pages 1-4)

10% – 15% (page 5)

6/5/2018

7/5/2018

Status: Most retaliatory measures effective as of 6/5/2018. An “exception” list is effective on 7/5/2018.
China For covered products, please click here. Annex I – 15% – 25% 4/3/2018
Status: For the latest status, please click here.

 

Following the imposition of new U.S. sanctions on Russia in April 2018, Russian lawmakers have introduced two draft bills proposing Russian countersanctions against ‘unfriendly’ states, as well as criminalizing compliance with foreign sanctions in Russia.

The Countermeasures Bill

The first measure, the Draft Bill No. 441399-7 On Measures (Countermeasures) in Response to Unfriendly Actions of the USA and (or) other Foreign States (the Countermeasures Bill) passed both chambers of the Federal Assembly, and was signed into law by President Putin and officially published on June 4, 2018. It is effective from that date.

The Countermeasures Bill was significantly watered down during its passage through the State Duma. Specifically, the Duma removed the specified categories of banned products and services that were proposed in the initial draft. The revised Countermeasures Bill as enacted includes the following six measures which may target the U.S., other ‘unamicable’ foreign states (the Relevant States), entities that are subject to the jurisdiction of the Relevant States, entities that are directly or indirectly owned by entities under the jurisdiction of the Relevant States (the Relevant Entities), officials and citizens of the Relevant States, if they are involved in ‘unamicable’ acts with respect to the Russian Federation:

  • Article 2(1): Termination or suspension of international cooperation between Russia and Russian legal entities and the Relevant States, including entities that are subject to the jurisdiction of the Relevant States, or the Relevant Entities, relating to sectors to be determined by a separate decision of the Russian President.
  • Article 2(2): Prohibition or restriction on the import of products and/or raw materials into Russia originating from the Relevant States or manufactured by the Relevant Entities. The list of products and/or raw materials shall be determined by the Russian Government. Significantly, such measures would not apply to (a) products which do not have substitutes manufactured in Russia, or (b) products imported for personal use.
  • Article 2(3): Prohibition or restriction on the export from the Russian Federation of products and/or raw materials by (a) citizens of the Relevant States and/or (b) the Relevant Entities. The list of products and/or raw materials will be determined by the Russian Government.
  • Article 2(4): Prohibition or restriction on access, directly or indirectly, to public procurement for providers of works/services that are Relevant Entities. The list of particular works/services prohibited from public procurement will be determined by the Russian Government.
  • Article 2(5): Prohibition or restriction on participation in privatization of state or municipal property for (a) citizens of the Relevant States and/or (b) the Relevant Entities. Prohibition or restriction for such persons from (a) providing works/services for the organization of sale of federal property in the name of the Russian Federation and/or (b) fulfilling functions as a seller of federal property.
  • Article 2(6): All other measures determined by a separate decision of the Russian President.

Such measures must be implemented by all federal and municipal bodies, as well as the citizens of the Russian Federation and entities under Russian jurisdiction (Article 1(4)).

The Criminalization Bill

On May 14, 2018, Russian lawmakers filed another draft bill in connection with the proposed countermeasures, this time proposing criminal liability for Russian citizens complying with non-Russian sanctions. The Draft Bill No. 464757-7 On Amendments to the Criminal Code of the Russian Federation (the Criminalization Bill) passed its first hearing stage with only minor changes. The second hearing for the Criminalization Bill was scheduled for May 17, 2018 but was postponed, pending further consultations with the Russian government and the business community. A new date for the hearing has not yet been set.

The draft bill introduces a new Article 2842 of the Russian Criminal Code, which creates the following two new types of criminal offenses and related liability:

  • Article 2842(1): Actions (or omission to act) aimed at compliance with a decision of a foreign state, union of foreign states or international organization to impose restrictive measures, if this action (omission to act) restricts or prohibits Russian citizens, legal entities incorporated in Russia, Russian Federation, subjects of the Russian Federation, municipal entities or entities controlled by any of the above (Russian private or public entities of entities controlled by them) to fulfil “ordinary economic operations or transactions”. Liability for such criminal offense ranges from (a) a fine of up to RUB 600,000 or four annual salaries or income, to (b) up to four years of imprisonment and also potentially a fine of up to RUB 200,000 or one annual salary or income.
  • Article 2842(2): Willful actions by Russian citizens that contribute to the imposition of restrictive measures by a foreign state, union of foreign states, international organization on Russian individuals, public and private entities (including their controlled entities). Such actions may involve recommendations and provision of information that led to the imposition of anti-Russian sanctions. Liability for such offense ranges from (a) a fine of up to RUB 500,000 or three annual salaries or income, to (b) up to three years of imprisonment and potentially a fine of up to RUB 200,000 or one annual salary or income.

An explanatory note to the new Article 2842 clarifies that “ordinary economic operations or transactions” means legal actions, aimed at performing contractual or other legal obligations, if such operation or transactions are carried on in the ordinary course of business, or other lawful activities, by individuals or entities (or foreign entities controlled by them) who are subject to restrictive measures (e.g., specially designated nationals or SDNs). Such transactions would include opening of bank accounts, making and accepting payments, trading securities, etc.

Based on the difference in terminology (insofar as the latter is limited to “actions by Russian citizens”), the proposed Article 2842(1) appears to apply both to Russian and to foreign citizens subject to Russian jurisdiction, in contrast to Article 2842(2), which appears to apply to Russian citizens only.

Russian business groups reportedly voiced opposition to the current draft of the Criminalization Bill. Russian President Putin has stated that the new law “should be balanced” and that it “must not do harm to our own economy and to those of our partners with good conscience do business in Russia.” We would therefore expect that the Criminalization Bill will be amended before being passed through its second hearing.

On May 23, 2018, the State Duma’s Law-making Committee held a meeting among policymakers and representatives of, among others, the Russian Union of Industrialists and Entrepreneurs, Retail Companies Association, European Businesses Association, and Russian banks and retailers. The majority view on the business side appears to be that the appropriate liability for compliance with foreign sanctions (i.e. the new criminal offense under Article 2842(1)) would be administrative (e.g. a fine), not criminal. However, the proposed criminal offense of contributing to the imposition of foreign sanctions, etc. (i.e. under Article 2842(2)) is likely to remain in the Criminal Code. The Law-making Committee will now consult on the results of these discussions with the Russian government and the responsible ministries. The next step would be for the Committee to prepare a revised draft of the bill. It is expected that the second draft would be ready for another round of discussions between the Committee and the business community representatives a week after the consultations with the government, and will then be submitted for the second hearing at the Duma.

If the Criminalization Bill is enacted in the current version (which does not appear likely given President Putin’s comments), companies operating in Russia and, in particular Russian citizen managers of the operation of Russian subsidiaries of U.S. or non-Russian companies, would face a substantial risk arising from the potential conflict generated by U.S. obligations that can apply to even non-U.S. entities (e.g., “secondary” sanctions or the designation authority in Section 228 of the Countering America’s Adversaries Through Sanctions Act (CAATSA) and the provisions in the Criminalization Bill.

 

On June 6, the European Commission (Commission) issued a press release stating, “The College of Commissioners endorsed today the decision to impose additional duties on the full list of US products notified to the World Trade Organisation (WTO), as part of the EU’s response to the US tariffs on steel and aluminium products.”

The release went on to state, “Following today’s decision to apply additional duties to selected imports from the United States, the Commission expects to conclude the relevant procedure in coordination with Member States before the end of June so that the new duties start applying in July.”

The Commission asserts the “rebalancing duties is fully in line with WTO rules, and corresponds to a list of products previously notified to the WTO. The WTO Safeguards Agreement allows for a rebalancing corresponding to the damage caused by the US measures with EU exports worth €6.4 billion (2017) being affected. The EU will therefore exercise its rights immediately on US products valued at up to €2.8 billion of trade. The remaining rebalancing on trade valued at €3.6 billion will take place at a later stage – in three years’ time or after a positive finding in WTO dispute settlement if that should come sooner.”

The retaliation tariffs (the rebalancing duties) may be found here. Those expected to begin in July are listed in Annex I (almost all at 25 percent). Annex II contains those to begin in three years, or after a positive finding in WTO dispute settlement. Those tariffs range from 10 to 50 percent.

 

On June 5, U.S. Customs and Border Protection (CBP) issued a message providing instructions for importers who receive approval for a steel or aluminum product exclusion from the Department of Commerce (DOC).

The message states, “Upon receipt of the approved product exclusion from the DOC, for the importer of record listed in the approved exclusion, please provide that company’s name, address and importer of record number, and the associated product exclusion number, to U.S. Customs and Border Protection (CBP) at Traderemedy@cbp.dhs.gov. You must provide this information to CBP before the importer of record submits the exclusion number with entries to CBP.”

Further instructions on how to provide the information are included.

It adds, “Exclusions granted by DOC are retroactive on imports to the date the request for exclusion was posted for public comment at Regulations.gov. To request an administrative refund for previous imports of excluded products granted by DOC, importers may file a Post-Summary Correction (PSC) and provide the product exclusion number in the Importer Additional Declaration Field.”

The message also states if an “entry has already liquidated, importers may protest the liquidation.”

 

 

Media sources are reporting the Department of Commerce will not consider steel and aluminum product exclusions for countries subject to quotas. Only countries facing the tariffs will be considered for product exclusions.

Currently, South Korea, Brazil, and Argentina have agreed to an absolute quota deal on certain steel products that are subject to the Section 232 tariffs.

The steel quotas are separated into 54 subcategories for South Korea, Argentina, and Brazil. Argentina has already reached its absolute quota for 40 of the 54 subcategories, while 18 subcategories have been filled for Brazil, and 9 have been filled for South Korea.

As of June 1, 2018, all countries of origin except Argentina and Australia are subject to the 10 percent tariff on aluminum products. Argentina agreed to cap exports of aluminum at 100 percent of the average exports to the U.S. over the last 3 years. The absolute quota is divided into two subcategories, equaling over 180,000 short tons per year.

Once a country reaches its quota for the quota period no entry for consumption of the product will be permitted.

Australia is currently the only country to have maintained a country-based exemption without having agreed to a quota regime.

 

 

On June 4, 2018, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Ukraine-/Russia-related General License 16 (GL16).

General License 16 authorizes U.S. persons to engage in specified transactions related to winding down or maintaining business involving EN+ Group PLC, JSC EuroSibEnergo, or any entity in which EN+ Group PLC or JSC EuroSibEnergo owns, directly or indirectly, a 50 percent or greater interest, until October 23, 2018.

GL16 is subject to a series of conditions that are familiar from OFAC’s previous wind-down licenses arising from the same action including, among other things: (a) that the transactions must be conducted pursuant to a contract or other agreement in place prior to April 6, 2018, (b) payments to these entities must be made to a blocked account, except to the extent authorized by General License 14 (related to United Company RUSAL PLC), (c) products cannot be exported from the United States to these persons, and (d) U.S. Persons utilizing the authority must file comprehensive reports with OFAC within 10 days from GL16’s expiration.

 

 

 

 

On May 31, 2018, the Department of Commerce announced the imposition of tariffs on imported steel and aluminum products from Canada, Mexico, and the European Union (EU). The 25 percent tariff on imported steel and the 10 percent tariff on imported aluminum products officially took effect on June 1, 2018. Canada, Mexico, and the EU had been temporarily exempted from the Section 232 tariffs during the ongoing renegotiation of NAFTA and trade discussions with the EU.

In response to the Section 232 measures, all three countries immediately condemned President Trump’s decision to eliminate the temporary country exemptions.

Canada unveiled a trade-restrictive tariff list valued at over $12.8 billion worth of U.S. products that will take effect on July 1, 2018 and will remain in place until the U.S. terminates the steel and aluminum tariffs on Canada. The scope of countermeasures is separated into two tables. Table 1 includes steel and aluminum products, which will be subject to a 25 percent duty; while goods selected from Table 2 will be subject to a 10 percent duty. Canada lodged a WTO challenge last Friday and is also asking for the establishment of a NAFTA dispute settlement panel.

Earlier in May, the EU also published two retaliation lists targeting American exports that could reach up to $7.5 billion. The first phase of tariffs will be implemented on June 20th, which will equal 2.8 billion euros (over $3.3 billion USD) worth of U.S. goods. The second phase will either be implemented on March 23, 2021, or the 5th day following the date of the adoption by, or notification to, the WTO Dispute Settlement Body of a ruling that the U.S. Section 232 tariffs violate the WTO Agreement, whichever comes first.

Mexico announced on June 4 that it “will initiate a dispute settlement process against the U.S. at the WTO.” Furthermore, Mexico’s Ministry of Economy published a list of U.S. goods that will be subject to equivalent measures to the Section 232 tariffs – including flat steel, lamps, pork legs, sausages, food preparations, apples, grapes, blueberries, various cheeses, and other products.

Please click here for the full list in Spanish.

 

 

On May 31, 2018, President Trump signed two new presidential proclamations adjusting steel and aluminum duties initiated under Section 232 of the Trade Expansion Act of 1962.

These ended temporary exemptions of duties for imports of steel and aluminum products from the European Union (EU), Canada, and Mexico. As a result, a 25 percent duty on steel products and a 10 percent duty on aluminum products are now being collected on imports from those countries.

President Trump originally announced the Section 232 tariffs on March 8, 2018. However, on March 22, he temporarily exempted imports of steel and aluminum from Australia, Argentina, South Korea, Brazil, Canada, Mexico, and EU member countries from the tariffs until May 1, 2018. President Trump subsequently extended this deadline to June 1.

The most recent May 31 proclamations continued tariff exemptions for imports from Brazil, Argentina, and South Korea, as those countries negotiated quotas restricting steel and aluminum exports to the U.S. The Proclamations announced the aggregate limits of imports from Argentina and Brazil, while the administration previously announced specific quota amounts for steel products from South Korea on April 30, 2018. The only country exempted from the tariffs and not subject to quotas is Australia.

A statement issued by the White House noted that “measures are in place to address the impairment to the national security threatened by imports of steel and aluminum from Argentina, Brazil, and Australia” and that “similar measures are not in place with respect to steel or aluminum imports from Mexico, Canada, or the European Union.” The statement also said “the Administration will continue discussions with [Mexico, Canada, and the European Union] and remains open to discussions with other countries.”

On May 23, 2018, the Secretary of Commerce initiated an investigation to determine the effects on the national security of imports of automobiles, including cars, SUVs, vans and light trucks, and automotive parts. This investigation has been initiated under section 232 of the Trade Expansion Act of 1962, as amended.

On May 30, 2018, the Department of Commerce (Commerce) published in the Federal Register details on the public hearing, scheduled for July 19-20, as well as the schedule for commenting and submitting rebuttal comments.

Interested parties are invited to submit written comments, data, analyses, or other information pertinent to the investigation to the Department of Commerce by June 22, 2018. Rebuttals to those comments are due by July 6, 2018.

June 22 is also the deadline for requesting to appear at the public hearing and for submissions of a summary of expected testimony.

Commerce will hold a public hearing on the investigation on July 19 and 20, 2018 in Washington, DC. The notice identifies the issues on which the Department is interested in obtaining the public’s views and discusses the procedures for public participation in the hearing.

Per the notice, Commerce is particularly interested in the following criteria as they affect national security:

 

 

  • The quantity and nature of imports of automobiles, including cars, SUVs, vans and light trucks, and automotive parts and other circumstances related to the importation of automobiles and automotive parts;
  • Domestic production needed for projected national defense requirements;
  • Domestic production and productive capacity needed for automobiles and automotive parts to meet projected national defense requirements;
  • The existing and anticipated availability of human resources, products, raw materials, production equipment, and facilities to produce automobiles and automotive parts;
  • The growth requirements of the automobiles and automotive parts industry to meet national defense requirements and/or requirements to assure such growth, particularly with respect to investment and research and development;
  • The impact of foreign competition on the economic welfare of the U.S. automobiles and automotive parts industry;
  • The displacement of any domestic automobiles and automotive parts causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects;
  • Relevant factors that are causing or will cause a weakening of our national economy;
  • The extent to which innovation in new automotive technologies is necessary to meet projected national defense requirements;
  • Whether and how the analysis of the above factors changes when U.S. production by majority U.S.-owned firms is considered separately from U.S. production by majority foreign-owned firms; and
  • Any other relevant factors.