Leibowitz on Trade: New China Tariffs Pushed Out to June 1

1. USTR issued a notice, which has not yet been seen in the Federal Register, setting a schedule for public comments and a hearing on covering new products. The list (which I’m referring to as “List Four”) covers virtually all tariff numbers that are not on Lists One, Two or Three. It covers about $300 billion in import value (2017 numbers), adding to the values of List One ($34 billion), List Two ($16 billion) and List Three ($200 billion). Total import value: $550 billion, or just about everything imported from China. Requests to appear at the hearing are due by June 10, and comments by June 17. The hearing date is also June 17.
2. USTR issued another notice, published Tuesday, modifying the effective date of the new 25 percent tariffs on List Three. As I reported a few days ago, the effective date for the new tariff rate was May 10 (last Friday). But only goods that were exported from China on or after May 10 were subject to the 25 percent rate. Customs published a fairly confusing notice saying that, until further guidance was received, the 25 percent rate would be applicable. Now, USTR has modified the process—the new effective date for the 25 percent tariff is June 1. I have not had a chance to talk with anyone about the reasons for the change, but I can guess. It is very hard to determine with certainty the date of export of a product. The bill of lading will say when the product was put on board ship, but there are no documents that will definitively state when the ship actually left the country of export. Bottom line: The 25 percent tariffs are effective on June 1, not May 10. 
3. USTR issued a new round of product exclusions under the China Tariffs. These exclusions are from List One. This is the fourth exclusion list from the List One tariffs. Earlier lists were published on Dec. 28, 2018; March 25, 2019; and April 18, 2019. Unlike product exclusions from steel and aluminum tariffs, and Section 201 tariffs on solar panels, cells and washing machines, the Section 301 product exclusions apply to all imports of the products described. In other words, companies needn’t have actually submitted exclusion requests to benefit. The exclusions are retroactive to July 6, the effective date for the List One tariffs. If you have questions, please let me know.
4. China has not been idle, either. China’s Ministry of Finance announced a retaliation list on imports to China from the United States. News articles are starting to appear—China is trying to grab the attention of major interest groups. Among them is the energy industry, which is now facing, as of June 1, 25 percent tariffs on exports of liquified natural gas to China. LNG has turned into a major export for the United States, thanks to “fracking” technology, which has unlocked tremendous reserves of oil and gas. 

As I said Sunday, this trade war looks like a long game.

Lewis Leibowitz

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