2019 Tariff Changes: Expectations and Supply Chain Strategies

If you’re currently navigating the impact of tariff changes as well as the potentially additional billions of dollars’ worth of tariffs on Chinese goods, we have the information you need to understand what’s changing—and just as important—what you can do about it.

What is a tariff?

In the United States, a tariff is a tax on imported goods. Tariffs are a major source of revenue and can promote/encourage domestic products.

How do tariffs work for section 301?

Tariffs can make trade with another country more costly. There are several types of tariffs, each with their own rules, but section 301 tariffs are based on a percentage of the item’s value. This is called an ad valorem tariff.

For example, plastic eyeglass cases in List 3 fall under the Harmonized Tariff Number 4202.32 1000, with the general rate of duty: 12.1 cent per kilo and 4.6% based on value. Now, with the Section 301 duties added in, there’s an additional 25% charge on top of the others. This simple product, which sells for less than $10 USD could be charged 29.6% plus 12.1 cents per kilo in tariffs.


What tariffs are changing?

Since we’ve previously covered the tariff changes from 2018, I won’t go into detail about them here. Instead, let’s focus on the most recent Section 301 trade actions that have taken place. There have been three major announcements regarding tariffs with China:

Section 301 List 3 tariffs

On May 9, 2019, the United States Trade Representative (USTR) formally announced Section 301 List 3 tariffs would increase to 25% from 10%, effective Friday, May 10, 2019. However, unique to how the Section 301 tariffs were previously implemented, this increase added some specific date criteria. The 10% tariff would still apply to goods exported prior to May 10, 2019, and entered into the United States before June 15, 2019. This was originally noted by the USTR as June 1, 2019, but updated on May 31 to extend an additional 15 days.

Proposed List 4 tariffs

In another major announcement, on May 13, 2019, the USTR published a notice requesting comments on a proposed List 4. The proposed fourth list of tariffs would impact about $300 billion USD in Chinese origin goods at a 25% tariff rate. This could go into effect as soon as late July or August 2019. If List 4 does go into effect, the Section 301 tariffs would cover over 96% of all U.S. imports from China. Public comments regarding List 4 are due into the USTR by June 17, 2019, when a public hearing will commence.

China’s tariffs on U.S. goods

These changes and proposals have not gone unnoticed by China. On May 13, 2019, the Chinese Government announced they will raise tariffs on $60 billion worth of U.S. goods. These increases in tariffs affect the three retaliatory tariff lists put into place by China in 2018, and raise the initial tariffs rates, depending upon the harmonized tariff code 10%, 20%, or 25%.


What do tariff changes mean for your supply chain?

At C.H. Robinson, we strive to be your Trusted Advisor® experts by providing you with information on matters affecting your supply chain. By leveraging data from 18 million shipments a year, we are able to deliver an information advantage to the over 200,000 companies that conduct business on our global platform, creating better outcomes for our customers, carriers, and employees.

That’s why we consult with our top transportation, customs, and trade policy experts to explain the ongoing tariff changes. These updates will help you understand:

  • The current state of tariffs
  • The impact on global and domestic transportation strategies
  • What you can do right now

Follow the discussion and consider how you will manage potential disruptions to your supply chain as tariff developments continue to unfold.


Next steps

If you would like more information or have questions, please connect with one of our trade experts.

Ben Bidwell
Director North Amercia Customs & Compliance
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