On June 21, 2018, the U.S. Department of Commerce published in the Federal Register an extended commenting schedule in the Section 232 investigation on U.S. imports of automobiles, including cars, SUVs, vans and light trucks, and automotive parts.

Commerce is now extending that comment period by a week from the initial deadline.

Interested parties are invited to submit comments, data, analyses, or other information pertinent to the investigation by June 29, 2018. Rebuttals to any  comments are now due by July 13, 2018.

June 29, 2018 is also the deadline for requesting to appear at the public hearing and for submissions of a summary of expected testimony. The public hearing will continue to be held on July 19 and 20, 2018 in Washington, DC.

Commerce initiated the Section 232 national security investigation on U.S. imports of automobiles and auto parts on May 23, 2018. Similar to the earlier completed 232 investigations on steel and aluminum, the investigation will determine whether imports of automobiles, including SUVs, vans and light trucks, and automotive parts into the United States threaten to impair the national security as defined in Section 232. For details, please click here, and here.

 

On June 20, 2018, the U.S. Trade Representative (USTR) announced in the Federal Register that, beginning on July 6, 2018, an additional 25% duty will be imposed on products from China set out in Annex A of the notice. Section 301 of the Trade Act of 1974. The USTR released details on the public hearing and comments schedule regarding these proposed additional tariffs on the list of products set out in Annex B of the notice.

Yesterday’s notice confirmed the USTR’s proposed section 301 actions on two lists of tariff lines released through a press conference on June 15. The first list included 818 tariff lines valued at $34 billion worth of imports from China. The second list includes 284 tariff lines and is valued at $16 billion worth of imports from China. For details, please click here.

The USTR will convene a public hearing regarding the second list of tariff lines on July 24, 2018. Interested parties are required to file a request to appear at the hearing and a summary of expected testimony by June 28, 2018.

Written comments pertinent to the second list of tariff lines are due by July 23, 2018. Rebuttals to those comments are due by July 31, 2018.

The USTR determined it would establish a process by which U.S. stakeholders could request that particular products classified within a covered tariff subheading in Annex A be excluded from these additional duties. However, details on the exclusion process have not yet been released. The notice indicates that USTR will publish a separate notice describing the product exclusion process, including the procedures for submitting exclusion requests, and an opportunity for interested persons to submit oppositions to a request.

 

 

Beginning on Friday, June 22, 2018, US exports to the European Union will face an extra duty at their border. These products include U.S. steel and aluminum products, agricultural goods, and a combination of various other products. The full list is available here. The various products include the following fashion and apparel articles, which will each be assessed an additional 25% ad valorem tariff penalty:

  • 61091000        T-shirts, singlets and other vests of cotton, knitted or crocheted
  • 61099020        T-shirts, singlets and other vests of wool or fine animal hair or man-made fibres, knitted or crocheted
  • 61099090        T-shirts, singlets and other vests of textile materials, knitted or crocheted (excl. of wool, fine animal hair, cotton or man-made fibres)
  • 62034231        Men’s or boys’ trousers and breeches of cotton denim (excl. knitted or crocheted, industrial and occupational, bib and brace overalls and underpants)
  • 62034290        Men’s or boys’ shorts of cotton (excl. knitted or crocheted, swimwear and underpants)
  • 62034311        Men’s or boys’ trousers and breeches of synthetic fibres, industrial and occupational (excl. knitted or crocheted and bib and brace overalls)
  • 62046231        Women’s or girls’ cotton denim trousers and breeches (excl. industrial and occupational, bib and brace overalls and panties)
  • 62046290        Women’s or girls’ cotton shorts (excl. knitted or crocheted, panties and swimwear)
  • 63023100        Bed linen of cotton (excl. printed, knitted or crocheted)
  • 64035995        Men’s footwear with outer soles and uppers of leather, with in-soles of >= 24 cm in length (excl. covering the ankle, incorporating a protective metal toecap, made on a base or platform of wood, without in-soles, with a vamp or upper made of straps, indoor footwear, sports footwear, and orthopedic footwear)

In a press release, the EU indicated it will rebalance bilateral trade with the US taking as a basis the value of its steel and aluminum exports affected by the US measures. Those are worth €6.4 billion. Of this amount, the EU will rebalance on €2.8 billion worth of exports immediately. 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 EU indicated that its rebalancing measures will be effective for as long as the US measures are in place, in line with the WTO Safeguards Agreement and EU legislation.

The Implementing Regulation, will be published by the EU tomorrow and entering into force on Friday. It will set out the products and level of duties to be applied, both now and (if necessary) in the future.

On June 15, China’s State Council announced it would retaliate against new U.S. tariffs stemming from its Section 301 investigation of China’s unfair trade practices related to the “forced transfer of American technology and intellectual property”.

The list of retaliatory tariffs expanded some 106 types of products China originally disclosed in April in response to the U.S. Section 232 tariffs on steel and aluminum products. China announced that the added tariffs would target $50 billion of U.S. goods to be implemented in two phases. The first list hits $34 billion of U.S. products across 545 categories with 25% tariffs beginning on July 6. This is the same day the United States will increase duties on the import of 818 tariff lines from China, also valued at $34 billion.

Agricultural products, sport utility vehicles, and electric vehicles are among the goods targeted by China.

China also released a second list with an additional $16 billion of U.S. goods to target with higher tariffs. The tariff rate and start date on the second list will be finalized later. The U.S. is also planning a second set of tariffs on $16 billion worth of Chinese goods after July 6, and the 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.

 

China (Response to Section 301 Tariffs) For covered products in List 1, please click here.

(Unofficial Version)

 

For covered products in List 2, please click here.

(Unofficial Version)

 25%

 

 

 

TBD

 7/6/2018

 

 

 

TBD
Status: List 1 is composed of 545 tariff lines, and goes into effect on 7/6/2018.

List 2 contains 114 tariff lines on U.S. goods worth $16 billion. Start date is unknown.

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 6/21/2018: added India, Japan, Russia, and Turkey.

Update on 6/18/2018: added China’s Section 301 retaliatory tariffs.

Update from 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 (Response to Section 232 Tariffs) For covered products, please click here. Annex I – 15% – 25% 4/3/2018
Status: For the latest status, please click here.
China (Response to Section 301 Tariffs) For covered products in List 1, please click here.

(Unofficial Version)

 

For covered products in List 2, please click here.

(Unofficial Version)

 25%

 

 

 

TBD

 7/6/2018

 

 

 

TBD
Status: List 1 is composed of 545 tariff lines, and goes into effect on 7/6/2018.

List 2 contains 114 tariff lines on U.S. goods worth $16 billion. Start date is unknown.
India For covered products, please click here. Up to $10.6 billion;
Annex I – 5% – 100%		 6/21/2018
Status: The U.S. declined India’s request for WTO consultations. Thus leading to India’s retaliation tariffs on U.S. goods, effective immediately.
Japan For covered products, please click here. Up to $1.91 billion TBD – no earlier than March 23, 2021, or the 5th day following the date of a decision from the WTO DSB, whichever comes first.
Status: No update since May 18, 2018. Ambassador Lighthizer is holding trade talks with Economy Minister Motegi in July. Under Secretary McKinney is also leading a trade mission to Japan to discuss a possible bilateral trade deal.
Russia For covered products, please click here. Up to $3.16 billion TBD
Status: Russia will apply the proposed suspension of equivalent concessions upon the expiration of 30 days from the day on which Council on Trade in Goods has been notified. The suspension will continue until the U.S. lifts the safeguard measures.
Turkey For covered products, please click here. Up to $1.78 billion;
Annex I – 5% – 40%		 6/21/2018
Status: The U.S. declined Turkey’s request for WTO consultions due to the provisions of the Safeguard Agreement. The Government of Turkey proposed the suspension of equivalent concessions starting June 21, 2018.

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.