Each week, the trade community watches the giant chess match between China and the United States, seeing who will make the next move, who will potentially “win” the match or if the game will end in a draw. Currently, the “game” is still in play with both sides moving pieces to win.

December 13: USTR Announces “Phase One” Agreement Between China and the U.S.

The 86-page agreement is being translated and reviewed by legal counsel. The United States makes the following concessions:

• U.S. agrees to NOT impose S301 List 4B 15 percent provisional duties on December 15, 2019
• U.S. agrees to reduce S301 List 4A provisional duties from 15 percent to 7.5 percent 30 days after the agreement is signed
• Phase One agreement anticipated to be signed in early January 2020

China makes the following agreements in exchange:

• Purchase more U.S. agricultural commodities
• Temporarily suspend additional tariffs of 5 percent and 10 percent on over 3,000 categories of exports from the U.S. scheduled for December 15, 2019
• Not add 25 percent tariffs back to vehicles and parts of the U.S.
• Agreed to certain structural changes involving intellectual property rights, coerced tech transfer, currency manipulation, etc.

That said, there is still no clear resolution to the war between these two trade giants. No timetable for a discussion on phase two. Section 301 Lists 1, 2 and 3 will remain at 25 percent on $250 billion in Chinese exports to the U.S. and 2020 will begin with continued uncertainty.

Clients are encouraged to consider the timing of their imports of products on List 4A to take advantage of the reduced provisional duties that have been proposed. However, until the agreement is signed, there is nothing concrete and provisional tariffs could remain at 15 percent into the first and second quarters of 2020.

Section 301 Product Exclusions

Additional product exclusions were announced on November 27, 2019 and December 12, 2019, covering additional List 3 product exclusions retroactive to the implementation date of September 24, 2018. Exclusions are not issued as company-specific. However, Harmonized Tariff numbers associated with the exclusion are not all-inclusive and importers must validate that the exclusion criteria meets their product specifications before filing a Post Summary Correction or protest to request a duty fund.

Section 301 is No “Respecter” of Countries

December 2 saw the USTR announcement of provisional tariffs being proposed on 100 percent duties against various French products valued at $2.4 billion, ranging from butter, cheese and wine to skincare, handbags and kitchenware. This Proposal is in response to a French digital services tax that would be collected against digital service companies providing services in France.

This tax has been reported as unfairly discriminating against big U.S. tech companies such as Facebook, Google, Apple and Amazon. The three percent tax was signed into law on July 24, 2019 by the French President, but is retroactive to January 1, 2019. Members of the trade are welcomed to comment through January 6, 2020 with a public hearing taking place on January 7, 2020 in Washington, D.C.

Section 301 is Still in the News

Brazil and Argentina have benefited from having lower S232 steel and aluminum rates than most of the other countries in the world. However, on December 2, the administration effectively increased the S232 duties to the world rate of 25 percent for steel and 10 percent for aluminum. This is due to the fact that these two countries are accused of “massive devaluation of their currencies,” effectively harming the U.S. farmer. That said, no formalized notice from the Federal Register has been published and no Presidential proclamation or Commerce Department action has been issued for the legal implementation of the announcement.

If you have any questions, please contact us or reach out to your Ascent Global Logistics representative directly.