Modification to S301 Tariffs: 10 Percent to 15 Percent
The highly anticipated Federal Register notice was published today, confirming that "List 4A" of the S301 will go into effect on September 1, 2019 at the rate of 15 percent for the products of China covered by the $300 billion tariff action. On August 20, 2019, 84FR43304 was published, stating that Annex A would be 15 percent effective September 1, 2019 and Annex C would be 15 percent effective December 15, 2019.
The USTR (United States Trade Representative) initiated an investigation on August 18, 2017 into the practices of the Government of China related to technology, intellectual property rights and innovation. Eight months later, the USTR determined that the policies and practices of China were discriminatory against the U.S. Commerce, actionable under Section 301(b) of the Trade Act of 1974. In June of 2018, the first Tranche was imposed, covering approximately 818 tariffs and a trade value of $34 billion. In August of 2018, the second Tranche was announced, covering 279 tariff subheadings and a value of $16 billion. In September 2018, the third Tranche was announced, covering over 5,700 tariff subheadings and an approximate annual trade value of $200 billion.
Over the past 20 months, leaders of the United States and China have met on numerous occasions attempting to reach a resolution on these violations. The discussions have not produced a constructive outcome thus far, with China imposing retaliatory tariffs on U.S. merchandise entering their country. Because of these stalled meetings and retaliatory acts, the USTR has modified the original action by increasing the rate of additional duty for Tranche 4A from 10 percent to 15 percent, effective September 1, 2019. Tranche 4B will be effective on December 15, 2019 at the rate of 15 percent.
In addition to this announcement, a pre-notice was published today, with official Federal Register publication date set for September 3, 2019, stating that due to the ongoing challenges being addressed between the governments of the United States and China, Tranche 1, 2 and 3 will be increasing from 25 percent to 30 percent, effective October 1, 2019. There will be a request for Public Comments through September 20, 2019. The comments must be written in English and submitted electronically via Regulations.gov. To submit comments via Regulations.gov, enter docket number USTR-2019-0015 on the home page and click "search." The site will provide a page of search results listing all documents associated with this docket. Find a reference to this notice and click on the link titled "Comment Now!"
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