On September 17, 2018, the Office of the US Trade Representative ("USTR") announced the final list for the third set of products imported from China that will be subject to an additional tariff ("US List 3")1 due to the Section 301 investigation on China's intellectual property-related trade and industrial policies.2 The new tariff will become effective September 24, 2018, initially at an ad valorem rate of 10 percent, which will increase to 25 percent on January 1, 2019.3 Previously, USTR finalized two lists of products imported from China that are now subject to an additional 25 percent ad valorem tariff. The additional 25 percent ad valorem tariff took effect regarding Chinese imports on the first list ("US List 1") on July 6, 2018,4 and the second list ("US List 2"), August 23, 2018.5 All three US Lists are based on HTS codes provided in the US tariff schedule.
US List 3 targets approximately $200 billion worth of Chinese imports.6 The final list contains 5,745 full or partial lines of the original 6,031 tariff lines that were on the proposed list announced on July 10, 2018, for which USTR sought public comment.7 As a result, USTR eventually determined to fully or partially remove 297 tariff lines from the July 10 list. Included among the products removed from the proposed list are (1) certain consumer electronics products such as smart watches and Bluetooth devices; (2) certain chemical inputs for manufactured goods, textiles and agriculture; and (3) certain health and safety products such as bicycle helmets, car seats and playpens. The final list continues to cover a broad range of imports from China, such as chemicals, textiles, metal products and electronics.
In response to the US action, China is moving forward with its own four lists of US imports proposed to be subject to differing levels of additional tariffs, which were announced by China on August 3, 2018.8 There appears to be no change to the proposed lists, as the number of tariff lines involved remains the same for all four lists. However, China decreased the original proposed duty rates based on the US announcement of September 17. The first two lists will now be subject to a new tariff of 10 percent and the third and fourth lists, 5 percent, effective on September 24 (the same date as the new US tariff).9 The Chinese announcement also promised additional countermeasures if the US government announces new tariffs against Chinese imports.
In the case of all tariffs imposed pursuant to the Section 301 proceeding, USTR provides US stakeholders with another opportunity to be exempt from the Section 301 tariff—a product exclusion process for specific products within an HTS code.10 We anticipate USTR to announce a product exclusion process for US List 3 in the near future.
1 https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/september/ustr-finalizes-tariffs-200 (USTR September 17 Announcement).
2 See Mayer Brown Legal Update, US Imposes 25 Percent Tariff on Second List of Chinese Imports (Aug. 28, 2015). (https://www.mayerbrown.com/US-Imposes-25-Percent-Tariff-on-Second-List-of-Chinese-Imports-08-28-2018/.)
3 USTR September 17 Announcement. The increase in duty rate is subject to intervening changes announced by the US government.
4 Notice of Action and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 28710 (June 20, 2018) (containing final US List 1).
5 Notice of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 40823 (August 16, 2018) (containing final US List 2).
6 The final US List 3 may be found here: https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff List_09.17.18.pdf.
10 The procedures for seeking product exclusions from US List 1 have been published. https://www.federalregister.gov/documents/2018/07/11/2018-14820/procedures-to-consider-requests-for-exclusion-of-particular-products-from-the-determination-of. A product exclusion process will be available for US List 2. https://www.federalregister.gov/documents/2018/08/16/2018-17709/notice-of-action-pursuant-to-section-301-chinas-acts-policies-and-practices-related-to-technology.
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