If Trump levies a 10% tariff on over $300 billion of goods on September 1st, all of Apple’s products from China would be impacted. What options does Apple have?
- Exclusions – Apple can apply for an exclusion of their goods that are covered by the proposed List 4.
- Country of origin – Apple’s major contract manufacturer, Hon Hai has additional production ability in Taiwan, India, Thailand and Vietnam and a shift to one of those countries may be possible. Samsung makes their Galaxy phones in Vietnam.
- Apple can ask their suppliers for price reductions to make up for the additional 10% duties.
Like Apple, other these options are also available to any company that manufactures in China. If you want to know what your company can do to lessen the impact of the potential duties, or want to know other ways to save money on duties – contact experienced trade attorney David Hsu at 832-896-6288 or by email at firstname.lastname@example.org, email@example.com.
As you are aware, the exclusion process for List 3 is now openuntil September. We have received a lot of exclusion requests and I thought I’d share the information the US Trade Representative (USTR) requires in order to review an exclusion request:
1. 10-digit subheading of the HTSUS applicable, use 8/10 digits (if there are different HTSUS 8 and 10 digit codes used, we will need a separate request)
2. Product name
3. Detailed description of the product: (1) physical characteristics (e.g., dimensions, weight, material composition, etc.). (2) Requestors may submit a
range of comparable goods within the product definition set out in an exclusion request. Thus, a product request may include two or more goods with
similar product characteristics or attributes. Goods with different SKUs, model numbers, or sizes are not necessarily different products.
4. The products function, application (whether the product is designed to function in or with a particular machine or other device), principal use, and any
unique physical features that distinguish it from other products within the covered 8-digit HTSUS subheading. Requestors may submit attachments that
help distinguish the product (e.g., CBP rulings, photos and specification sheets, and previous import documentation). Documents submitted to support a
Requestor’s product description must be made available for public inspection and contain no BCI. USTR will not consider requests that identify the
product using criteria that cannot be made available for public inspection.
5. Requestors must provide their relationship to the product (Importer, U.S. Producer, Purchaser, Industry Association, Other) and provide specific data
on the annual quantity and value of the Chinese-origin product, domestic product, and third-country product the Requestor purchased, in 2017, 2018,
and the first quarter of 2019.
6. Requestors must provide information regarding their company’s gross revenues for 2018, the first quarter of 2018, and the first quarter of 2019.
7 For imports sold as final products, Requestors must provide the percentage of their total gross sales in 2018 that sales of the Chinese-origin product
8. For imports used in the production of final products, Requestors must provide the percentage of the total cost of producing the final product(s) the
Chinese-origin input accounts for and the percentage of their total gross sales in 2018 that sales of the final product(s) accounted for. Required
information regarding the Requestor’s purchases and gross sales and revenue is BCI and the information entered will not be publicly viewable.
9. Whether the particular product is available only from China and whether the particular product and/or a comparable product is available from sources
in the United States and/or in third countries. The Requestor must provide an explanation if the product is not available outside of China or the Requestor
is not sure of the product availability.
10. Whether the Requestor has attempted to source the product from the United States or third countries.
11. Whether the imposition of additional duties (since September 2018) on the particular product has or will cause severe economic harm to the
Requestor or other U.S. interests.
12. Whether the particular product is strategically important or related to “Made in China 2025” or other Chinese industrial programs.
If you have any questions about the exclusion request process, contact experienced attorney trade attorney David Hsu at 832-896-6288 or by email at firstname.lastname@example.org.
Due to the ongoing trade war, China is no longer the largest trading partner with the US, having been replaced with the US’ neighbors to the north and south – Canada and Mexico. For the first half of 2019, imports from China to the US dropped by 12 percent and US exports to China fell by 19 percent. The current duties on Chinese goods (301 duties) covers 3 lists of goods and covers over $250 billion worth of imports. Trump has proposed an additional List 4 duties covering all remaining imports from China, a duty that will cover over $300 billion in goods from China.
This is the first time since 2005 that China has trailed behind Mexico as a US trading partner and the first time since 2015 to 2018 that China has not been the top US trading partner.
As you are aware, yesterday, President Trump imposed a September 1st deadline for an additional $300 billion in tariffs on Chinese goods if a trade deal is not reached.
The $300 billion covers the remaining items not previously listed in Lists 1, 2 or 3. The List 3 exclusion process is currently underway and Commerce recently published lists of additional exclusion requests that have been granted in Lists 1 and 2.
Here is a summary of what has been reported by various news outlets:
- There has been no progress in trade talks with China this week in Shanghai between Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer and their Chinese counterparts.
- Trump believes China is moving too slow in working on a deal and set September 1st as a deadline to impose duties on the remaining imports of goods from China.
- The new duties if imposed in September will be at 10%. We have seen goods in List 1, 2, 3 have tariffs as high as 25%.
- Some news outlets report that China may be stalling to sign a trade deal until after the 2020 election.
- September 1st would mark an end to a “truce” between the two countries.
- China has threatened to respond with their own retaliatory tariffs if Trump goes through with the September 1st deadline.
- Trump claims China has not gone through with their promise to buy more agricultural products from the US in large quantities.
- Trump also claims China would curtail the shipments of Fentanyl to the United States, but has not and the shipments continue to harm Americans.
- According to reports, Chinese negotiators want Trump to remove the tariffs on $250 billion in Chinese goods before they will purchase US agricultural goods and comply with their other concessions.
- Trump believes the US economy is strong as unemployment has hit a 50-year low, a position that will enable the US to outlast China in the event of a prolonged trade war.
- Analysts claim further duties will only hurt Americans in increasing the prices of goods.
- Shipping companies and importers are trying to get as many shipments into the US prior to the September 1st deadline.
Will post more news as they become available. If you have any questions how the 301 duties will impact your business, contact David Hsu at: email@example.com, firstname.lastname@example.org or by phone/text at 832-896-6288.
According to CNBC, profits earned by China’s industrial firms fell 3.1% in June from a year earlier, according to the China’s National Bureau of Statistics.
The decrease in industrial profits is likely due to the US/China trade war and the increase in tariffs on Chinese imports. CNBC also states that economic growth in the second quarter slowed to a near 30-year low.
With the US and China set to meet on July 30th for the first time since May, both sides may be looking for an agreement to end the almost year-long trade war.
US imports of cherries to China was zero in the year 2000, growing to over $200 million in 2017. However, the current US China trade war and the retaliatory tariffs implemented by China have caused the US exports of Cherries to China to fall to about $200,000 for the year.
In retaliation for the Section 301 duties placed on Chinese imports, China in turn levied tariffs on US goods – for example, a 50% duty on US cherries. As a result, the US only shipped 187 tonnes in May 2019, versus 337 tonnes in May 2018 and 1,505 tonnes in May 2017. In fact, US cherry growers sometimes exported more cherries to China than to Canada.
Columbia Grain Trading Inc. (owned by Japan-based Maurbeni Corp.) says they will stop all new soybean sales to China due to falling sales as of July 24th. The reasons cited include falling sales volume to China due to the trade war with the US.
China was the top buyer of U.S. soybeans until Beijing levied a 25% tariff on shipments of soybeans from the US in response to US tariffs on Chinese goods.
China imported 16.6 million tonnes of soybeans from the United States in 2018, about half of the 32.9 million tonnes purchased the in 2017 before the trade war.