India & Turkey removed from GSP & lingering uncertainty regarding Section 301 tariffs
The tariff landscape continues to change with recent news that India and Turkey will be removed from the Generalized System of Preferences (GSP). Participant countries in GSP are given preferential duty for many of their products imported into the US. The loss of these preferences will again affect US importers who have already faced additional duties on some basic steel and aluminum products in addition to many items imported from China. Secondary problems associated with these changes include a sharp increase in bonds deemed to be insufficient based on increased duties and tighter credit terms from brokers.
While there is some hope that India may be able to regain their GSP status the removal of Turkey seems to be permanent. The purpose of GSP has been to allow underdeveloped counties to have easier access to the US market and evidence shows that Turkey may have progressed to the point that it no longer needs to receive preferential treatment. India is in a different position in that the U.S. is reacting to what it feels to be unfavorable market conditions afforded U.S. companies doing business there.
There may be some light at the end of the tunnel for Sec 301 tariffs on Chinese goods as negotiations between China the US have shown much progress. Enough progress to at least indefinitely forestall the scheduled increase to 25 percent on items found on the large Round 3 list. The negotiations with China have centered on removing tariff and non-tariff barriers for US companies exporting to and doing business there. These 10 to 25 percent tariffs have been difficult for many US importers and customs brokers; both are dealing with ever changing tariffs resulting in program glitches and increased costs. Only when a final deal is struck will we know if and when the additional tariffs will be rescinded.
Just last week a new list of items excluded from the Sec 301 tariffs was announced. The list covers specific items classified under HTS codes found on Round 1 of the Sec 301 lists and have carried a 25 percent additional tariff. Items now exempt are classified in chapters 84 through 90 and a full list can be found by clicking here.
In the long run, opening more markets to fair trade would be better for all of us – the US and our future trading partners. The future of Section 301 tariffs has yet to be determined and has proved to be a challenge every step of the way. The question still remains, what’s next?