SEMA eNews Vol. 22, No. 10, March 7, 2019

U.S. Trade Representative Blocks Program to Seek Exclusions From 10% Tariffs on Chinese Products

By SEMA Washington, D.C., Staff

Congress instructed the U.S. Trade Representative (USTR) to establish a process for requesting an exclusion from the 10% tariffs on $200 billion worth of Chinese products. The directive was included in the federal spending bill signed into law in February. The exclusion process was to be the same as established for $50 billion worth of Chinese goods subject to 25% tariffs. However, USTR Ambassador Lighthizer only intends to establish an exclusion process if the 10% tariffs increase to 25%. It is his contention that the recent devaluation of the Chinese Yuan means the 10% tariff is only having a 2% or 3% impact.

President Trump has delayed indefinitely a proposed increase in the 10% tariffs. U.S. and Chinese officials are reportedly making progress in talks to resolve trade disputes. They are drafting six separate agreements covering agriculture, services, non-tariff barriers, currency, intellectual property rights and forced technology transfers, and cybersecurity.

To address the exclusion dispute, SEMA-supported legislation has been introduced in the U.S. House of Representatives and Senate that would mandate creation of an USTR program for the 10% tariffed-products (along with any other Chinese products covered in the future). The bill is called the Import Tax Relief Act (H.R. 1452/S. 577). It has been introduced by U.S. Representatives Jackie Walorski (R-IN) and Ron Kind (D-WI) and Senators James Lankford (R-OK) and Chris Coons (D-DE). SEMA will provide updates as the legislation is scheduled for consideration.  

For the tariffs on $50 billion worth of Chinese goods, the USTR will consider granting an exclusion if a company can demonstrate that the product is available only from China, that the tariff will cause severe economic harm and that the good is strategically important. Tariffs on the $50 billion worth of Chinese products cover some automotive products; however, most covered auto parts are subject to the 10% tariffs. It is estimated that U.S. importers have paid the U.S. Treasury $12.2 billion in Chinese tariffs as of February 21.

For more information, contact Stuart Gosswein at stuartg@sema.org.  

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