On Monday, May 6, 2019, U.S. Trade Representative Robert Lighthizer piggybacking on the President’s tweet announced that the tariff rate on the third tranche (List 3) of Section 301 tariffs would be increased from 10% to 25% at 12:01am on May 10, 2019. Robert Lighthizer issued a statement that USTR plans to release a draft federal register notice on the tariffs today; however, nothing further has been published or announced in the Federal Register for Tuesday May 7, 2019.
This statement by Lighthizer 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).
Ambassador Lighthizer further elaborated on the issues with the trade agreement negotiations, saying, “Over the last week or so, we have seen an erosion in commitments by China.” He also said that a Chinese delegation would be arriving in Washington on May 9 to continue the talks.
This sudden announcement comes on the heels of ongoing negotiations with China on the possible elimination of tariffs pending finalization of the trade deal. The concern is that the USTR believes that the Chinese joint venture laws end up in forced technology transfers which has been a key sticking point in the negotiations. The Chinese delegation is expected to arrive in Washington on Thursday, May 9th, and should the delegation arrive and continue negotiations then this sudden increase may be forestalled for the interim. There also seems be a disconnect in the administration between USTR and the Treasury Department with Treasury Secretary Steve Mnuchin claiming that the deal was almost “90 percent done.”
The third tranche of Section 301 tariffs is on $200 billion worth of Chinese products. The U.S. initially planned to increase tariffs on these products from 10% to 25% on March 1, 2019; however, President Trump delayed the increase on February 24 as the U.S. and China were making “substantial progress” in their negotiations at the time. (See our previous post here.)
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.