The U.S. Trade Representative (USTR) released a press statement announcing the list of imports from China that will face a Section 301 10 percent tariff (see also Trump and Trade Update of May 14, 2019). Implementation of the tariff on approximately $300 billion worth of Chinese products will occur in two phases. For most products, the tariff will go into effect on September 1, 2019, as announced by President Donald Trump on August 1, 2019 (see Trump and Trade Update of August 1, 2019). The USTR determined, however, that certain products should be spared the tariff until December 15, 2019. In its statement, the USTR announced that certain products have been removed from the tariff list based on health, safety, national security and other factors and will not be assessed the 10 percent tariff.

List 4A (additional tariffs as of September 1, 2019) includes but is not limited to the following broad categories of products imported from China: certain live animals; various forms of animal carcasses and meat cuts; certain milk, butter, yogurt and creams; certain fats and oils; certain cheeses; certain flower bulbs, trees, plants and shrubs; certain vegetables, fruits and nuts; certain coffee and teas; certain spices and extracts; certain prepared meats; certain sugars, powders and syrups; certain mixes for bakers wares; certain pastas and cereals; certain forms of ice cream and edible ice; certain forms of wine, brandy, whiskies, rum and other alcoholic beverages; certain tobacco products; various organic chemicals and essential oils; certain plastic and rubber articles; certain rawhides and animal skins; certain printed books, newspapers, pictures and other products of the printing industry; various woven and knitted fabrics; certain items of men’s/boys’ and women’s/girls’ and baby clothing; numerous types of gloves, mittens, shawls and scarves; certain bed linens and bedspreads; certain items of footwear; certain cutlery, ceramic and glassware items for household table or kitchen purposes; certain natural or cultured pearls, precious or semi-precious stones, precious metals; certain articles made of iron or steel; certain alloy or nonalloy steel; certain items made from aluminum, and other articles made of base metal; certain boilers, machinery and mechanical appliances; certain electrical machinery and equipment; certain sound recorders, loudspeakers and recording and video devices; certain televisions, video monitors and projectors; certain motorcycles; tanks and warships; contact lenses and certain corrective eyewear and sunglasses; certain cameras; various wristwatches and clocks; certain wind, stringed, keyboard, percussion and other musical instruments; military weapons; certain sporting good articles for hockey, lacrosse, baseball, badminton and fishing; and certain pens and pencils.

List 4B (additional tariffs as of December 15, 2019) includes but is not limited to the following broad categories of products imported from China: certain food products; certain organic chemicals; cell phones, laptop computers, video game consoles; certain toys; computer monitors; certain items of footwear; certain items of men’s/boys’ and women’s/girls’ clothing; certain pet toys; certain paper products; certain woven and knitted fabrics; numerous types of gloves, mittens, shawls and scarves; fireworks; certain bed linens and bedspreads; various umbrellas; certain cutlery, ceramic and glassware items for household table or kitchen purposes; copying machines; flashlights; certain radio broadcast receivers; certain cameras and projectors; various types of clocks and watches; certain string musical instruments; certain infant chairs and booster seats; certain play yards for children; certain articles for Christmas festivities; certain sporting good articles for hockey, baseball, badminton and fishing; and certain toiletry and hair products.

There are products with similar descriptions covered under each list. Only by reviewing and comparing the appropriate HTS subheading and product description will U.S. importers be able to determine which list covers an imported Chinese product.

The USTR will soon publish in the Federal Register additional details and lists of the tariff lines affected by today’s announcement. The USTR confirmed that it intends to conduct an exclusion request process for products subject to this 10 percent tariff but has not announced when it will begin.

President Trump yesterday signed an executive order imposing additional sanctions on the Venezuelan government. The order, “Blocking Property of the Government of Venezuela,” blocks all property and interests in property of the Venezuelan government within the jurisdiction of the United States. It authorizes the secretary of Treasury, in consultation with the secretary of State, to block all property and interests in property of the persons who have been determined to have “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” the Venezuelan government, or any person acting directly or indirectly for it. This action also restricts the entry of sanctioned persons into the United States.

As support for this action, Trump’s order referenced the “continued usurpation of power by Nicolas Maduro and persons affiliated with him, as well as human rights abuses, including arbitrary or unlawful arrest and detention of Venezuelan citizens, interference with freedom of expression, including for members of the media, and ongoing attempts to undermine Interim President Juan Guaidó and the Venezuelan National Assembly’s exercise of legitimate authority in Venezuela.” In a statement released today, the White House noted that “[t]his Executive Order directly targets those who undermine either the democratically elected National Assembly of Venezuela or Interim President Juan Guaidó.”

The U.S. Department of the Treasury announced yesterday that Secretary of the Treasury Steven Mnuchin is designating China as a “currency manipulator,” stating that “China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past. The context of these actions and the implausibility of China’s market stability rationale confirm that the purpose of China’s currency devaluation is to gain an unfair competitive advantage in international trade.” Mnuchin’s move follows the decision of the People’s Bank of China (PBOC) to allow the yuan, also known as the renminbi, to fall to its lowest level in more than a decade. The PBOC’s decision is perceived as a response to President Donald Trump’s tweet last week stating that products on the yet-to-be finalized List 4 of imports from China valued at $300 billion will be assessed a 10 percent tariff starting September 1 (see Trump and Trade Update of August 1).

The Omnibus Trade and Competitiveness Act of 1988 directs the Treasury secretary to “consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.” In a recent Treasury report submitted to Congress, it noted “China’s long history of facilitating an undervalued currency through protracted, large-scale intervention in the foreign exchange market.” Under the Trade Facilitation and Trade Enforcement Act of 2015, the actions the president may take include engaging with the International Monetary Fund “for additional rigorous surveillance” of China’s macroeconomic and exchange rate policies, prohibiting the Overseas Private Investment Corporation from financing projects in China, and prohibiting the federal government from entering into procurement contracts with Chinese companies. These remedial actions, however, may only be taken “one year after the commencement of enhanced bilateral engagement.” This decision may influence the U.S. Department of Commerce to adopt a proposed rule to treat currency manipulation and undervaluation as countervailable subsidies in trade remedy cases (see Trump and Trade Update of May 24).

On August 2, 2019, the Office of the U.S. Trade Representative (USTR) issued its first batch of Section 301 product exclusions for imported Chinese products appearing on List 3. These products, which have an annual trade value of approximately $200 billion, have been subject to Section 301 tariffs since September 24, 2018. The USTR determined that 10 specific products will be excluded from the tariffs, covering 15 separate exclusion requests: (1) certain container units of plastics; (2) certain injection molded polypropylene plastic caps or lids; (3) certain kayak paddles; (4) high tenacity polyester yarn not over 600 decitex; (5) certain nonwovens; (6) pet cages of steel; (7) certain carts used for household shopping; (8) certain truck trailer skirt brackets; (9) certain inflatable boats; and (10) certain inflatable kayaks and canoes.

These exclusions were issued shortly after the USTR established in its June 24 Federal Register notice a product exclusion process for List 3 products covered by Section 301 tariffs (see Trump and Trade Update of June 20). The exclusions apply to any product that satisfies the description in the annex of the August 2 notice, regardless of whether the company using the exclusion filed the request. The exclusions apply retroactively to September 24, 2018, and will extend for one year after publication of the August 2 notice. U.S. Customs and Border Protection will soon issue instructions on entry guidance and implementation. USTR will continue to issue determinations on pending requests on a periodic basis.

It has not been officially announced yet, but President Donald Trump tweeted today (see below) that products on the yet-to-be-finalized Tranche/List 4 of imports from China valued at $300 billion will be assessed a 10 percent tariff starting September 1. While noting that this week’s trade negotiations between the U.S. and Chinese governments were constructive after faltering in May 2019 (see Trump and Trade Update of May 14, 2019), the president stated that China has yet to purchase any agricultural products and has not made any effort to reduce its sales of fentanyl, which China had agreed to do in June during a meeting on the sidelines of the Group of 20 summit in Japan. It appears that the president will now instruct USTR Robert Lighthizer to implement this 10 percent tariff under Section 301 of the Trade Act of 1974.

Trump and Trade will continue to monitor and report on this latest development in the U.S.-China trade war.

On July 30, 2019, JSW Steel (USA), Inc. (JSW) filed a complaint against the United States and, specifically, the Department of Commerce (Department) for denying its product exclusion requests for certain steel imports that otherwise are subject to a 25 percent tariff under President Donald Trump’s March 2018 proclamation implementing such tariffs under Section 232 of the Trade Expansion Act of 1962. The complaint seeks declaratory relief from the U.S. Court of International Trade (CIT) determining that the Department’s denial of JSW’s product exclusion requests was arbitrary and capricious, and that the requests should have been granted and ordering the Department to provide JSW a refund of any tariffs paid. Alternatively, JSW asks that the matter be remanded to the Department for proper review and consideration.

While other complaints have been filed at the U.S. Court of International Trade concerning the Trump administration’s Section 232 actions (see Trump and Trade Update dated March 25, 2019), they have unsuccessfully challenged the president’s application of the Section 232 national security provisions to steel imports. Instead, this complaint challenges the administrative process and manner in which the Department’s Bureau of Industry and Security (BIS) reviews product exclusion requests and denied JSW’s request.

The complaint alleges, among other issues, that the BIS “ignored record evidence establishing that the steel slab JSW USA imports is not presently available in the U.S. market, and instead issued the same boilerplate denial to each and every one of JSW USA’s exclusion requests.” In doing so, the complaint alleges, the BIS “yielded to the objections of three competitive domestic steel producers – United States Steel Corporation, AK Steel Corporation, and Nucor Corporation …” and “undertook no effort to verify their claims, ignored the conclusive evidence that these companies are unable to produce the subject products in the required quality or quantity, and failed even to offer any reasoned basis for its decisions.” The resulting denial of JSW’s product exclusion request was arbitrary and capricious or otherwise unlawful in violation of the Administrative Procedures Act, the complaint claims. JSW alleges that the president’s proclamation and the Department’s regulations concerning the review and processing of Section 232 exclusion requests “direct” that an exclusion be granted “for imported steel products that are not immediately available in sufficient quality and quantity in the United States.” JSW references the implementing rule for the Section 232 steel tariffs and exclusion request process in which the term “immediately” means whether the product is currently produced or could be produced “within eight weeks” in the United States in order to support its position that the volumes needed by the domestic steel user described in the exclusion request cannot be satisfied unless the request is granted. Arguing that the Department’s rule places the burden on an objector to show that it can produce a “substitute product” within the requisite timeframe, JSW alleges that the three objectors simply filed blanket objections with no meaningful supporting evidence that they could in fact produce the identified steel products in “a sufficient and reasonably available amount.”

The case is JSW Steel (USA), Inc. v. United States, Court No. 19-00133, before the U.S. Court of International Trade.

The Office of the U.S. Trade Representative released today its first batch of product exclusions for List 2 of the Section 301 tariffs on imports from China valued at $16 billion. List 2 products were assessed a 25 percent tariff as of August 23, 2018. This batch of exclusions covers 69 specially prepared product descriptions, resulting from 292 separate exclusion requests. These product descriptions include: numerous polyethylene-based chemicals, film, sheets and products; certain polyol blends; polyvinyl chloride film; spark-ignition rotary or reciprocating internal combustion piston engines to be installed in agricultural or horticultural machinery or equipment, 4,476 W or more but not more than 37.6 kW; certain gas or propane engines; heat guns; apparatus capable of generating and projecting liquid particles of a size that simulates haze, fog, snow or bubbles; oral irrigators (dental water-jet machines); certain electric motors and related parts; amorphous silicon solar charges; certain motorcycles; digital clinical thermometers; cooking and infrared thermometers; and fingertip pulse oximeters.

As noted by the USTR in past approval notices, these exclusions are available for any product that meets the description in the annex to the related Federal Register notice, regardless of whether the importer filed an exclusion request. The scope of each exclusion is governed by the scope of the product descriptions in the annex and is not governed by the product description set out in any particular request for an exclusion.

These product exclusions will apply as of August 23, 2018, and will extend for one year after the publication of this notice in the Federal Register. U.S. Customs and Border Protection will shortly issue instructions on entry guidance, implementation of these exclusions and refund procedures.

According to recently released U.S. Customs and Border Protection (CBP) data, the agency has assessed, as a result of tariffs implemented through U.S. government actions under Section 232 of the Trade Expansion Act of 1962 and Sections 201 and 301 of the Trade Act of 1974, approximately $30.9 billion in import duties as of July 24, 2019 (see CBP’s trade statistics page). The table provided below shows that U.S. importers paid more than $22.1 billion in duties from the Section 301 tariffs on imports from China; more than $7 billion under the Section 232 tariffs on steel and aluminum; and another $933 million in duties under the Section 201 safeguard actions involving washing machines and solar cells.

Trade Remedy Enforcement Imported Products Total Duties Assessed
Section 201 Duty Assessment Washing Machines $164,819,591.87
Washing Machine Parts $1,305,815.76
Solar Panels $767,170,784.31
Section 232 Duty Assessment Aluminum $1,897,965,757.93
Steel $5,974,830,872.48
Section 301 Duty Assessment China $22,111,718,487.58

While $30.9 billion may seem significant, consider that U.S. trade – both goods and services – with China totaled an estimated $737.1 billion in 2018. According to the Office of the U.S. Trade Representative (USTR), U.S. exports to China were $179.3 billion and imports were $557.9 billion. China remains the United States’ largest trade partner in goods.

Due to China’s retaliation in the form of its own tariffs – primarily on U.S. agricultural products – the Trump administration is providing two rounds of financial support to U.S. farmers. In 2018, the U.S. Department of Agriculture (USDA) provided $12 billion in relief to farmers affected by the trade disputes with China and other countries (see USDA Announces Details of Assistance for Farmers Impacted by Unjustified Retaliation). Currently, the USDA is preparing to provide another $16 billion through USDA’s Market Facilitation Program, Food Purchase and Distribution Program and Agricultural Trade Promotion Program (see USDA Announces Details of Support Package for Farmers).

On July 15, 2019, President Donald Trump signed an executive order, Maximizing Use of American-Made Goods, Products, and Materials, to further promote the principles underlying the Buy American Act of 1933. In remarks to the press, the president stated that “Early in my presidency, I ordered the federal government to live by two very simple but very crucial rules: Buy American and hire American. You know, it’s called ‘America First,’ folks.” He added, “The philosophy of my administration is simple: If we can build it, grow it, or make it in the United States, we will.”

This executive order continues the Trump administration’s effort to strengthen the standards used and applied under the Buy American Act. In this executive order, Trump directs the Federal Acquisition Regulatory Council (FARC) to consider tightening the preference requirements for federal acquisitions and when foreign products can be used, highlighting that his administration “shall enforce the Buy American Act to the greatest extent permitted by law.” While the order does not impact current government procurement activity, it directs FARC to undertake a review and “consider proposing for notice and public comment” amendments to the Federal Acquisition Regulations that materials would be considered to be foreign in origin if:

  • for iron and steel end products, the cost of foreign iron and steel used in such iron and steel end products constitutes 5 percent or more of the cost of all the products used in such iron and steel end products; or
  • for all other end products, the cost of the foreign products used in such end products constitutes 45 percent or more of the cost of all the products used in such end products.

Currently, a product can be of 50 percent foreign origin and still be considered U.S.-made if it is not a commercial-off-the-shelf (COTS) product. If a proposed rule is prepared for public comment, the FARC review could significantly raise these U.S.-origin content requirements. The executive order instructs FARC to undertake this review and consider proposing a rulemaking notice within 180 days (on or about January 12, 2020).

This is the third executive order signed by President Trump to enhance and revise certain requirements under the Buy American Act. On April 18, 2017, he signed an executive order seeking stricter enforcement of federal procurement policies and revamping the H-1B guest-worker visa program (see Trump and Trade Update dated April 17, 2017) and on January 31, 2019, the president signed an order directing federal agencies administering certain infrastructure programs to “encourage recipients of new Federal financial assistance awards pursuant to a covered program to use, to the greatest extent possible, iron and aluminum” as well as other manufactured products made in the United States (see Thompson Hine International Trade Update dated February 19, 2019).

President Donald Trump has issued a presidential memorandum concluding the Section 232 Investigation into the effect of uranium imports on U.S. national security and declining at this time to take any further action on uranium imports. Instead, the president is establishing a United States Nuclear Fuel Working Group (Working Group) to develop recommendations for reviving and expanding domestic nuclear fuel production.

In January 2018, Energy Fuels Inc. and Ur-Energy Inc. jointly submitted a petition to the U.S. Department of Commerce (Commerce) for relief under Section 232 of the Trade Expansion Act of 1962 from imports of uranium products from state-owned and state-subsidized enterprises in Russia, Kazakhstan and Uzbekistan (see Trump and Trade Update of January 17, 2018). In July 2018, Commerce initiated the investigation and informed the Department of Defense of the matter (see Trump and Trade Update of July 18, 2018). Any action would have likely had a disproportionate impact on Canada, the most significant source of imported uranium for the United States.

In the presidential memorandum, Trump acknowledged Commerce’s findings that (1) uranium “is being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States as defined under section 232 of the Act,” (2) the United States imports approximately 93 percent of its commercial uranium, compared to 85.8 percent in 2009, and (3) increased production by foreign state-owned enterprises “have distorted global prices and made it more difficult for domestic mines to compete.” Despite these concerns, Trump stated that he does not agree with the determination of a national security risk and is seeking a “fuller analysis of national security considerations with respect to the entire nuclear fuel supply chain” through the establishment of the Working Group. The Working Group will examine “the current state of domestic nuclear fuel production to reinvigorate the entire nuclear fuel supply chain, consistent with United States national security and nonproliferation goals.” A report to the president from the Working Group must be submitted by October 10, 2019, setting forth its findings and making recommendations to further enable domestic nuclear fuel production if needed.