China Retaliatory Tariffs

On April 3, 2018, the Office of the U.S. Trade Representative (USTR) released the proposed list of Chinese products that could be subject to an additional 25 percent tariff as part of the Section 301 probe into Chinese IP practices.

USTR recommended that a 25 percent tariff be applied to $50 billion worth of Chinese goods, covering nearly 1,300 HTS codes. Products within the scope of the proposed duty include engines, agricultural and textile machinery, semiconductors, batteries, tires, medical products, and instruments used in aeronautical and space navigation.

In addition, China unveiled another retaliation list of U.S. goods worth $50 billion that could be subject to an additional 25 percent tariff. China’s list of 106 products includes soybeans, airplanes, automobiles, beef, and chemicals.

The Section 301 Committee will convene a public hearing on May 15, 2018 to discuss the proposed action in response to China’s IP acts, policies, and practices. Requests to appear at the hearing must be submitted by April 23, 2018. The request must also include a summary of testimony, along with the pre-hearing submission. Interested parties may submit written comments by May 11, 2018, and post-rebuttal comments by May 22, 2018.

USTR requests that public comments include the following:

  • The specific products to be subject to increased duties, including whether products listed in the Annex should be retained or removed, or whether products not currently on the list should be added.
  • The level of increase in the rate of duty, if any.
  • The appropriate aggregate level of trade to be covered by additional duties.USTR also requests that commenters specify whether maintaining or imposing additional tariffs on the product would cause economic harm to U.S. interests.
  • If a party is commenting on the inclusion or removal of a product already listed as a proposed item to be subject to additional tariffs, USTR requests that commenters address whether imposing increased tariffs on the product would be practicable or effective in eliminating China’s IP acts, policies, and practices.

On April 1, 2018, the Ministry of Commerce of the People’s Republic of China announced the country’s intention to impose retaliatory tariffs on U.S. goods. The Ministry suggested that China’s response was not designed to escalate tensions between the two countries. Instead, China hopes that the U.S. will quickly rescind the Section 232 tariffs that “violate World Trade Organization rules,” according to the Ministry’s statement on Sunday.

China informed the WTO on March 29 that it would suspend concessions on 128 U.S. products in retaliation to the Section 232 tariffs on steel and aluminum imports. According to the filing, China will apply an additional duty of 15 percent on 120 items including fruits, nuts, wine, and steel and iron tubes and pipes; and an additional duty of 25 percent on 8 items including pork and aluminum scrap. China acted pursuant to Article 8 of the Agreement on Safeguards by notifying the WTO of its intention to impose retaliatory tariffs against the United States.

The Trump administration responded to China’s retaliatory tariffs by telling China to focus on fixing its own “unfair trading practices” instead of targeting “fairly traded” U.S. exports by imposing additional tariffs.

The tariffs on the 128 U.S. goods took effect on April 2, 2018.