China, Tariffs, and Trade Policy. What’s Going On? | C.H. Robinson
If changes in trade policy have been giving you and your team whiplash lately, you’re not alone. A lot has happened recently on the global stage, and there is a lot to sift through. We compiled some of the top concerns we hear from customers. Read this summary, and consider how you will manage potential disruptions to your supply chain as developments continue to unfold.
Section 201 Safeguard tariffs
- Tariff Rate Quota went into effect on February 7, 2018, against any country importing certain products into the United States.
Section 232 National security tariffs
- The United States added 25% tariffs on steel and 10% tariffs on aluminum imports from all nonexempt countries, effective March 23, 2018.
- Certain types of companies can file for exclusions by product. Each different product needs a separate exclusion filed, and exclusions are good for one year only. Find the specific filing forms here: https://www.bis.doc.gov/index.php/232-aluminum and https://www.bis.doc.gov/index.php/232-steel. Public review and objections are allowed within 30 days of request for exclusion. If denied, you can resubmit. If approved, exclusions are retroactive to the date an exclusion was filed.
- In retaliation, China announced effective April 2, 2018 they will apply tariffs to 128 products imported from the United States.
- An additional tariff rate of 15% applies to most commodities, including fruits.
- A 25% tariff rate will apply to 8 items, including pork.
- On May 31, the U.S. announced that Canada, Mexico, and the EU will be removed from the exemption list effective midnight, June 1.
- Per CSMS# 18-00372, as of June 1, 2018, all countries will be subject to the 232 tariffs except Argentina, Australia, Brazil, and South Korea for steel; for aluminum, all countries will be subject except Argentina and Australia.
- Additionally, absolute quota will be applicable for imports from Argentina, Brazil, and South Korea for steel imports; and to Argentina for aluminum imports as of June 1, 2018.
- Generalized System of Preferences (GSP) and African Growth Opportunity Act (AGOA)-eligible goods that are subject to Section 232 duties or quotas may not receive GSP or AGOA duty preference in accordance with 19 USC 2463(b)(2) per CSMS#18-00372.
- For information on implementing the Section 232 tariffs, see the announcement the White House issued on May 31, 2018.
Responses from Countries to U.S. Section 232 Tariffs
A number of countries are responding to U.S. tariffs. To see country specific proposed countermeasures, see links below:
- Canada – Canada Proposed Countermeasures to U.S. Tariffs
- Mexico – Mexico Proposed Countermeasures to U.S. Tariffs
- The European Union – EU Proposed Countermeasures to U.S. Tariffs
Section 301 Unfair trade practice tariffs
- On March 22, 2018, the U.S. announced potential tariffs on 1,300 products of Chinese origin, including:
- Pharmaceutical products
- Rubber products
- Metals, including iron and steel
- Nuclear reactors, boilers, machinery, and equipment
- Electrical machinery
- Rail locomotives, rolling stock, and equipment
- Automotive and other vehicles, as well as parts
- Aerospace products and parts
- Ships and boats
- Other parts and components for automotive, aircraft, and ships
- In response to the proposed 301 tariffs, China announced that a 25% tariff rate will apply to a list of goods in 106 categories, including U.S. soybeans, cars, and planes (to name a few), worth about U.S. $50 billion. This would only go into effect if the U.S. implements the 301 tariffs and is subject to change by China officials.
- On May 29, the U.S. announced that Section 301 tariffs will now move forward, with a final list of tariffs to be made available on June 15; implementation of these tariffs will follow shortly thereafter.
What you can do now
1. Identify risks.
U.S. Customs and Border Protection (CBP) will be looking for misclassification and valuation issues, and you can expect increased oversight. Go to CBP’s website to read guidance on the Customs audit/survey, Centers of Excellence (CEE) for Base Metals, Customs valuation encyclopedia, tariff classification, Section 232 tariffs on aluminum and steel, and how to receive and respond to CBP forms 28 (request for information) and 29 (Notice of Action) in ACE.
Remember that tariffs are based on the country of origin, not the country of export. Look at both direct impact—what you, as an importer, pay to CBP on these tariffs, easily tracked in your ACE reports or your broker report—as well as indirect impacts. Indirect impacts include goods you buy domestically or have imported by another U.S. party that could be subject to 232 tariffs.
2. Avoid potential delays in the import process.
With the tariff changes, it may take more time for importers and customs brokers to process clearances. To avoid any unnecessary delays, U.S. exporters should ensure the accurate Harmonized Tariff Classification (HTS) codes are communicated to importers in China before shipment departure.
In the actual process to get goods entered to Customs, items involving 232 steel/aluminum should be considered a priority. To avoid delay, CBP has provided instructions in CSMS#18-000240 for entering goods into the U.S. In addition to this process, importers should review tariff classifications for parts that have steel and aluminum components to ensure accuracy.
Then, move on to reviewing classifications for Section 301 items. Tariff classification is the driver of all safeguard tariffs as well as partner government agency requirements. Ensuring that your products are classified properly according to the U.S. Harmonized Tariff Schedule will be key to understanding your potential exposure and fielding any inquiries from CBP.
Additionally, be sure to review your customs bond with your broker. If these tariffs impact any of your product, CBP may require an increase in bond amount, and the surety may require collateral as part of that required increase.
3. Strengthen your trade and customs compliance programs and practices.
Keep your personnel trained in changes to regulations. We provide full-day seminars to help you stay abreast of the latest information.
There is a lot of material here and much to digest. The above material is very specific and you should always discuss with your customs broker, legal counsel, and/or CBP. This blog post is not meant to cover every aspect and provision of the above topics.
Find out more about our trade policy group or register for one of our customs seminars in a city near you. You can also sign up for our Client Advisories, and we’ll automatically notify you as future developments occur.