On May 8, 2019, USTR released its federal register notice on the sudden tariff increase on the third tranche (List 3) Section 301 tariffs on China. The duty rate on the estimated $200 billion worth of Chinese products will increase from 10% to 25% effective 12:01am ET on Friday, May 10, 2019. The notice also announces that an exclusion process will be instituted for these products in a separate notice.
The rate increase to 25% means that entries of goods
(i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and
(ii) exported to the United States on or after May 10, 2019
will now be subject to an additional tariff of 25%. Entries must be subject to both qualifiers-meaning that if a shipment has been exported prior to May 10, 2019 it will still be subject to the 10% duty rate. However, if the shipment is exported after 12:01am ET on May 10 the 25% duty rate will apply.
Per CBP Message 19-000238 issued May 10, 2019 Customs limited the in-transit time for goods subject to the 10% duty rate by requiring that all shipments, irrespective of the date of export, must be entered before June 1st to obtain the 10% duty rate.
This unusual decision to institute tariffs with less than 72 hours notice is yet another development in an already troubled and increasingly uncertain trade relationship between China and the United States.
This follows President Trump’s announcement via Twitter that the U.S. would be increasing the tariffs on China as the trade deal negotiations are moving “too slowly” and China’s attempt to “renegotiate.” (See our previous post here). The notice says that “China has chosen to retreat from specific commitments agreed to in earlier rounds” of the trade negotiations as the reason for the increase.
A delegation of Chinese officials will be arriving in D.C. on May 9 to continue the talks.
We will continue to monitor this situation closely. For more information on the Section 301 tariffs on China, please contact Robert Stang, Jeffrey Neeley, Nithya Nagarajan, Cortney Morgan, or Beau Jackson.