Despite the reignition of tensions in May, hopes of reconciliation began to grow in the preeminence of the G-20 international economic forum, held in June. While substantial progress was not made, President Trump and potential dictator for life Xi Jinping appeared to slow the escalation, coming to a bilateral good-faith agreement. Supposedly, the two nations agreed that the United States would soften the sanctions imposed on Chinese tech giant, Huawei, contingent that China begins to repurchase American agricultural products, as well as halt their exportation of Fentanyl.
The tentative “cease-fire” also intended to delay the United States’ imposition of the threatened list 4, which would levy a 25% ad valorem on roughly $300 Billion worth of Chinese goods. The new round of tariffs looms over China, considering that 2019 proved to be their worst fiscal year in recent memory. In fact, this is the most sluggish Chinese economy in nearly three decades, which many directly attribute to President Trump’s vigilant economic policies.
However, approximately a month since the United States graciously showed the illicit regime restraint, China refuses to uphold their end of the bargain. Chinese imports of American agriculture has failed to accelerate, and similarly, their exportation of Fentanyl remains a major health threat to the United States.
“China agreed to…buy agricultural product from the U.S. in large quantities, but did not do so,” President Trump said. “Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States—this never happened, and many Americans continue to die.”
…buy agricultural product from the U.S. in large quantities, but did not do so. Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die! Trade talks are continuing, and…
— Donald J. Trump (@realDonaldTrump) August 1, 2019
China’s most recent defiance led President Trump to announce that the US will proceed to implement a 4th list of tariffs. Despite the fact that the originally proposed list would levy 25% ad valorem, the new list, which is set to go into effect on September 1, will start at a 10% ad valorem tariff (and can be increased to a 25% tariff at a later date). The list still targets $300 Billion worth of goods and is set to affect almost all items not included in List’s 1, 2, and 3. Whereas list’s 1 and 2 affected steel, aluminum, and other metals, list 3 began to cast a wider net. List 4 however, includes a variety of goods ranging from clothing to basic electronics.
Although some of the items subjected to list 4 appear outside the scope of the Section 301 Investigation, they aim to execute the overall objectives of the investigation; mainly, combat China’s dishonest and harmful trade violations. While the United States seemingly wished to avoid levying the 4th list, China’s continuous violation of international law, as well as their disregard for agreed-upon terms, leaves the US with little avenues of leverage, other than implementing the proposed list.
Given the downtrodden nature of China’s economy, many optimists believe that the latest round will be the metaphorical straw-that-breaks-the-camel’s-back, bringing the Chinese back to the negotiating table, for an honest and effective end to this year’s long trade dispute. Pessimists, on the other hand, highlight China’s intended targets of the Tariffs, primarily agricultural producers, who they know to be a large base of President Trump’s supporters, as evidence of their true intentions: continue to harm the US until the 2020 Presidential election.
The comment period for List 4 has ended, but, we expect an exclusion request process to open. We will keep you updated once an official notice is posted on the exclusion process for List 4. List 3 exclusion requests are being accepted until September 30, 2019. We encourage everyone impacted to take advantage of the opportunity and make your voice heard.
For background information on China Tariffs and numerous ways to mitigate the effect of the China tariffs, check out our previous blogs. Diaz Trade Law has assisted clients in assessing their best options to prepare or mitigate the China tariffs and submitted comments and exclusions. Our Customs and International Law attorneys are available at 305-456-3830 or email@example.com.
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