After trade talks in Shanghai, President Trump announces 10% tariff implementation effective September 1, 2019

 

August 1, 2019

This week the U.S. and China concluded trade talks in Shanghai with no breakthroughs announced.

Prospects for major progress was muted heading into the meeting and both sides described the talks as constructive. A new round of trade negotiations are scheduled to take place in Washington in early September.

Today, President Trump announced the fourth round of Section 301 tariffs on Chinese goods will be implemented at 10 percent, effective September 1.

This move comes in the wake of China’s failure to substantially increase purchases of U.S. agricultural products. The increased purchases were an integral part of the agreement reached at the recent G-20 summit to forestall implementation of the new Section 301 tariffs.

Round 4 could impact imports worth $300 billion and covers, just about, all goods not listed in the earlier rounds. Should this latest round of tariffs be imposed, it is likely the Chinese government will consider reciprocal action.

Please see the list link here: Section 301 China Tariffs / Round 4.

Even before the Section 301 tariffs for Chinese products were implemented, Vietnam was gaining market share due to lower costs with many manufacturers opening or relocating factories there. Higher tariffs on Chinese goods, however, have resulted in a significant increase in the importation of Vietnamese made goods into the U.S.

In a 12 month period ending May 31, the U.S. trade deficit with Vietnam reached a record high of $47.1 billion. Vietnam has become a major global exporter of furniture, apparel, electronics and overall exports to the US; a growth of 26 percent in the first quarter.

Anti-dumping cases have already been brought against certain Vietnamese products, but the U.S. may be inching closer to proposing Section 301 tariffs on a broader range of Vietnamese products.

This action is currently only under review; at this time public information on potential rates and affected HTS codes is not available.

As with China the U.S./Vietnam trade dispute issues involve market access restrictions, and possible currency manipulation, in addition to the growing trade deficit.

The U.S. is looking closely for Chinese products moving through Vietnam to avoid the Section 301 tariffs, as well as for steel products from Taiwan and South Korea undergoing minor processing in Vietnam, in an attempt to circumvent anti-dumping duties.

Vietnam has shown a willingness to buy U.S. products, such as aircraft, and they have also worked with the U.S. to crack down on deceptive labeling of Chinese products being re-exported.

We will continue monitoring this situation and alert you with any changes.  If you have any questions please contact us.

Sam McClure,
Director of Compliance & Customs Services

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