Trade Policy

On February 24, 2019, President Trump announced via tweet that he would be delaying the increase of Section 301 tariffs on China. The U.S. planned to increase tariffs on $200 billion worth of Chinese products from 10% to 25% on March 1, 2019 (See our previous post here). However, in his February 24 tweet, the President expressed his approval with the status of the trade talks, stating that the parties had made “substantial progress…on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.” President Trump did not specify a new deadline date for imposing additional tariffs or concluding the trade talks, but anticipates hosting a summit for both himself and President Xi at Mar-a-Lago to conclude the agreement. Just hours after the tweet, President Trump also made a remark at the Governor’s Ball on the bilateral talks, saying, “And if all works well, we’re going to have some very big news over the next week or two.”

On Sunday, February 17, 2019, the U.S. Department of Commerce reportedly submitted its report to the President following its investigation into whether imported cars and parts pose a threat to national security under Section 232 of the Trade Expansion Act of 1962. This investigation was initiated in May 2018 at President Trump’s request.  The report has not been released to the public yet. The administration is required to release any part of the report that does not contain classified information in the Federal Register.

The President signed on Friday, February 15, 2019, the Consolidated Appropriations Act, 2019, an appropriations bill to keep the government fully open. In the Joint Explanatory Statement (JES) from the House Appropriations Committee that accompanied the bill, Congress directs the Office of the U.S. Trade Representative (USTR) to create an exclusion process for the third tranche of Section 301 tariffs on China “no later than 30 days after the enactment of this Act, following the same procedures as those in rounds 1 and 2….”  This language does not tie a round 3 exclusion process to the level of the tariff (10% or 25%).  Significantly, though, this language in the JES was not included as part of the bill signed by the President and is therefore not legally binding.  Nevertheless, the JES expresses Congress’ intent and indicates that Congress expects USTR to begin an exclusion process covering goods on List 3 no later than March 17, 2019.

The U.S. is expected to make an announcement on whether India will retain eligibility under the Generalized System of Preferences (GSP) program within the next two weeks according to unidentified sources cited by Reuters. The Office of the U.S. Trade Representative (USTR) is currently reviewing the eligibility of Indian products for duty-free entry into the U.S. under GSP as a response to petitions from the dairy and medical device industries. On November 1, 2018, USTR suspended GSP tariff reductions on 90 imports from India worth $75 billion including textiles, chemicals, and musical instruments.

On December 28, 2018, the United States Trade Representative (“USTR”) published in the Federal Register  the first notice granting  product exclusions for specific products from the Section 301 tariffs subject to an additional 25% duty effective July 6, 2018.   The exclusions apply only to the $34 billion worth of Chinese tariffed products from Tranche 1. These exclusions will extend for one year from the date of publication of the notice.

With the year winding down, we have prepared a comprehensive timeline and summary of the tariff actions of 2018, including the Section 232 steel and aluminum tariffs and Section 301 tariffs on China. We have also provided information on retaliatory tariffs imposed on the U.S. by other countries during this same timeframe.