SEMA eNews Vol. 22, No. 20, May 16, 2019

25% Tariffs on Chinese Imports Take Effect on June 1 for Goods Shipped Before May 10

By SEMA Washington, D.C., Staff

The United States and China have embarked on a trade war following a breakdown in negotiations. The 10% tariffs imposed last September on $200 billion worth of Chinese imports rose to 25% on May 10. However, the tariff hikes will not take effect until June 1 for products shipped before the May 10 deadline but still in transit to the United States.

The so-called “List 3” group of Chinese imports includes many auto parts, from engines and metal fasteners to tires, steering wheel components, rubber gaskets, transmission belts, brake pads, windshields and suspension springs. The Trump Administration had already imposed 25% tariffs on $50 billion worth of Chinese imports in July and August 2018. “List 1” and “List 2” goods include some miscellaneous metal and rubber parts for auto equipment, machinery, tools and measurement devices.

China had already imposed retaliatory tariffs in the amount of 5% and 10% on $60 billion worth of U.S. goods. Most of these levies will increase to 10%, 20% and 25% and include many agricultural products. The tariffs will stay at 5% for a few categories including vehicle parts.

U.S./Chinese negotiations continue despite the tariff wars, with the June 1 effective date allowing a little hope for a truce. President Donald Trump and Chinese President Xi Jinping are scheduled to meet at the G20 summit on June 28–29.

The trade talks were reportedly nearing completion until a disagreement on how to end the practice of forced technology transfers whereby U.S. companies are coerced into sharing technology trade secrets with their Chinese business partners. There is also a dispute on how to enforce the agreement, with the U.S. wanting to keep some tariffs in place for at least six months while compliance is demonstrated.

U.S. and Chinese officials are reportedly drafting six separate agreements covering agriculture, services, non-tariff barriers, currency, intellectual property rights and forced technology transfers and cybersecurity. If talks break down further, President Trump has threatened to impose 25% tariffs on the remaining $325 billion worth of “List 4” Chinese products as soon as the end of June. Public comments on the List 4 tariffs are due June 17.

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

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