United States: Tariffs: The Never-Ending Saga

On June 15, 2018, the Trump Administration took the next step in escalating trade tensions with China by imposing additional 25% tariffs on imports of more than 800 products under Section 301 of the Trade Act of 1974.¹ This announcement comes after the Administration imposed additional tariffs on imports of steel (25%) and aluminum (10%) products from nearly all countries under Section 232 of the Trade Expansion Act of 1962.

The Trump Administration has made tariffs a key element of its trade agenda. While there has been significant back and forth on which countries and industries will be subject to tariffs or may be a target of future announcements, the Administration appears poised to continue using tariffs as both a bargaining tool and a weapon. This article provides an update on the most recent tariff related developments.

Section 301 Tariff List Announced

On June 15, 2018, the Office of the United States Trade Representative ("USTR") released a list of Chinese goods that will be subject to an additional 25% tariff.² The product list covers approximately $50 billion worth of Chinese imports. The final announcement pares back the previously proposed list of 1,333 products following a period of public comments and hearings. These punitive tariffs were issued in response to what the USTR called China's unfair trade practices and the forced transfer of American technology and intellectual property. The tariffs are intended to target Chinese imports involving industrially significant technologies, including those identified in China's "Made in China 2025" policy.

The June 15 announcement included two sets of products. The first list contains 818 tariff lines covering approximately $34 billion worth of imports from China. These 818 product types will be subject to a 25% duty rate. U.S. Customs and Border Protection ("CBP") will begin to collect the additional duties on July 6, 2018.

A second list of 284 products covering approximately $16 billion worth of imports from China will be subject to a second public review and comment process, including a public hearing. After the completion of this process, USTR will issue a final list of products based on these 284 proposed tariff lines. The final list will also be subject to a 25% tariff rate.

Companies impacted by these tariffs will be allowed to apply for the exclusion of particular products from the tariffs. USTR has not yet announced how this process will work. However, USTR will publish a notice in the Federal Register detailing the exclusion process in the next few weeks.

Canada, Mexico, and the EU are No Longer Exempt

On May 31, 2018, President Trump issued two new Presidential Proclamations³ related to the tariffs on steel and aluminum. Most notably, these Proclamations provide that Canada, Mexico, and the EU are no longer exempt from the steel and aluminum tariffs. In his previous Proclamations from March 22, 2018,⁴ President Trump had granted exemptions from the 232 tariffs to Australia, Argentina, Brazil, and the EU. Canada and Mexico had been exempted pursuant to the initial steel and aluminum tariff announcement on March 8.⁵

With regards to steel, the 25% tariff is now applicable to imports of steel from, among others, Canada, Mexico, and the EU. The duty does not apply to imports of steel from Argentina, Brazil, or Australia. These countries join South Korea who was previously granted an exemption. For aluminum, the 10% tariff is now applicable to imports of aluminum from Canada, Mexico, Brazil, and the EU. Imports of aluminum from Argentina and Australia will remain exempt from the tariffs.

The 232 tariffs have been met with hostility by U.S. allies. Canada and the EU have promised to impose retaliatory tariffs. Additionally, Mexico has already imposed tariffs targeting certain U.S. products, including pork, apples, potatoes, bourbon, and cheese. The 232 announcement is also worth monitoring for its potentially negative impact on ongoing NAFTA negotiations.

Section 232 Investigation into Automobile Imports Initiated

On May 23, 2018, Secretary of Commerce Wilbur Ross announced that, at the direction of President Trump, the Department of Commerce ("DOC") would initiate an investigation under Section 232 into the impact of auto imports on U.S. national security. The investigation will focus on whether automobiles, including SUVs, vans and light trucks, and automotive parts imported into the U.S. threaten to impair the national security of the U.S. such that retaliatory measures are warranted. In announcing the investigation, the DOC noted imports of passenger vehicles into the U.S. has grown from 32% of the cars sold in the U.S. to 48% in the last 20 years. In this same time, employment in motor vehicle production declined by 22%.

This process is still in the early stages, so whether or not any tariffs will be implemented is still unknown. However, interested parties will be able to submit comments, data, analyses, or other information pertinent to the investigation by June 22, 2018.⁶ Rebuttal comments will be due by July 6, 2018. The DOC will then hold a public hearing on the investigation on July 19 and 20, 2018 in Washington, D.C.

Tariffs have proven to be a constantly evolving situation. As such, companies should keep a close eye on tariff developments. Torres Law will continue to closely monitor all tariff related developments. Please do not hesitate to contact us if you have any questions or require any assistance.

Footnotes

1 Section 301 of the Trade Act of 1974 authorizes the President to take action to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.

2 Office of the United States Trade Representative, USTR Issues Tariffs on Chinese Products in Response to Unfair Trade Practices, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/june/ustr-issues-tariffs-chinese-products last visited June 15, 2016).

3 Whitehouse.gov, Presidential Proclamation Adjusting Imports of Steel into the united States, https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states-4/ (last visited June 15, 2018); Whitehouse.gov, Presidential Proclamation Adjusting Imports of Aluminum into the United States, https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-aluminum-united-states-4/ (last visited June 15, 2018).

4 For more information, please see our previous article: Tariff Updates: New Exemptions, Deals Made to Avoid Tariffs, and New China Tariffs Incoming. This article can be found here: http://www.mondaq.com/article.asp?articleid=688866.

5 For more information, please see our previous article: Tariffs on Steel, A Sign of Trade Wars on the Horizon. This article can be found here: http://www.mondaq.com/article.asp?articleid=681920.

6 Comments and rebuttal comments can be made at www.regulations.gov. Comments should be made under docket DOC-2018-002

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