Current US Tariff Action Deadlines

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I receive many questions about the deadlines for all the various tariff actions, I thought I’d post all the upcoming deadlines for your convenience.

If you have any questions regarding any 301 or 232 duties or are interested in filing of comments or an exclusion, or need assistance filing a response to comments, feel free to contact David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.

August 20-23 – Public hearing in DC for List 3

August 23, 2018 – 25% duty effective on List 2

September 6, 2018 – deadline to submit written comments for List 3

September 6, 2018 – deadline to submit post-hearing rebuttal comments

October 9, 2018 – deadline for product-specific exclusions for List 1

14 days after request for exclusion posted on docket – deadline for responses to requests for product-specific exclusion.

7 days after the close of response period – deadline for responses filed during the 14-day response period.

To Be Announced – 10% or 25% duty on List 3

How you can protect your company in light of the new China tariffs.

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Since “List 1” of the tariffs on Chinese goods became effective on July 6th, we’ve had many calls from importers, forwarders and brokers on the best practices moving forward. Here’s a quick summary of what any importer should do regarding their imports of Chinese goods –

  1. Apply for a company-specific exclusion from the tariffs. The U.S. Department of Commerce (Commerce) has published procedures for doing so on their website. The current approved exclusions are from steel tariffs with more exclusions to follow as Lists 2 and 3 take effect likely later this year.
  2. Review your classifications of imported merchandise. There may be more appropriate HTSUS numbers that your merchandise can be entered under and not subject to duties.
  3. Companies can also use the rules of origin to see if imported merchandise can be from another country other than China. This could result from moving the manufacture location, or moving the location of the “substantial transformation” of those goods.
  4. Adjust the valuation of the merchandise. See if the imported goods are properly valued.
  5. If merchandise is imported to the US for export out of the US, be sure property TIB, IT, T&E bonds are filed.
  6. No one likes surprises – it is best for importers, compliance, supply chain, sales and accounting to notify company management of potential tariff changes and the economic impact these new tariffs will have on profit and costs.

If you have any questions or want to know how your company can protect itself from these new duties, contact experienced trade attorney David Hsu at 832.896.6288 or by email at dhsu@givensjohnston.com.

ZTE pays $400 million into escrow, BIS removes ZTE from denied persons list.

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ZTE Company Logo from Wikipedia/ZTE.com

This just in, ZTE has complied with the terms of their agreement and placed $400 million into escrow. As a result, the US Department of Commerce, Bureau of Industry Security has terminated the April 15, 2018 denial order and removed ZTE from the denied persons list. The full release from the US DOC, BIS website can be found here.

Here’s a listing of all previous ZTE posts on this blog:

ZTE and Commerce sign escrow agreement – denial ban is one step closer to being lifted.

ZTE Open for US Business – sort of and only until August 1, 2018.

ZTE deal is good to go – House bill does not include Senate language “undoing” ZTE deal.

ZTE pays $1 billion fine, $400k into escrow soon.

In-depth details of the ZTE deal.

Senate passes amendment to undo Trump’s ZTE deal.

Deal reached between the US and ZTE.

ZTE facing $1.7 billion penalty?

The real reason Trump is working to reverse the 7 year ZTE ban? To help U.S. companies!

CNBC reports the US and ZTE are working on alternatives to the denial order issued against ZTE back in April of this year.

ZTE estimated to lose $3.1 billion due to US sanctions (Bloomberg).

Deal reached to allow ZTE to purchase U.S. hardware and software?

ZTE may need to change management and board in order to access US suppliers.

ZTE report to the HKEX on the impact of the US denial order: “major operating activities of the Company have ceased”.

ZTE and Huawei banned for sale to US military personnel.

ZTE banned from purchasing US technology for 7 years.

 

 

 

What should my company do regarding the Section 232 and Section 301 tariffs?

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We are fielding a lot of calls from importers, vendors, manufacturers, brokers and freight forwarders about what to do now that the Section 232 and Section 301 tariffs are in place.

We suggest:

  1. Review the list of products to determine your company’s exposure to Section 301 and Section 232 tariffs. The First Section 301 list can be found here.
  2. If there is a product on the second list of the Section 301 tariffs, you should participate in the comment process. The second list can be found here.
  3. If you are importing a product covered under Section 301 or Section 232, look into other alternatives for sourcing.
  4. This may be a good time to review your imported and exported goods and the classification used.
  5. Notify your customers, suppliers, vendors, buyers of potential price impacts of these new tariffs.
  6. Review pending purchase orders and pending shipments with companies in China, Canada, Mexico and the European Union.

If you have any questions about Section 232 or Section 301, contact experienced trade attorney David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com. We also assist in filing exclusion requests and submission of comments, call or email now for immediate assistance.

Breaking news – Section 301 Statement by US Trade Rep. Robert Lighthizer and list of Chinese goods impacted by $200 billion in tariffs.

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Robert Lighthizer, official portrait, work of the U.S. Federal Government

U.S. Trade Representative (USTR) Robert Lighthizer released a statement today regarding Section 301 of the Trade Act.

The full statement can be read here.

Here’s a summary of the statement:
1. Last Friday, US started imposing tariffs of 25% on $34 billion worth of Chinese imports.
2. Will eventually cover $50 billion in Chinese imports.
3. Tariffs are against products that benefit from China’s industrial policy and forced technology transfer practices.
4. China retaliated with $34 billion in tariffs and threats on $16 billion more.
5. In resopnse to China’s retaliation, President Trump ordered tariffs of 10% on an additional $200 billion in Chinese imports.

Brief history of the 301 tariffs:
1. Last August (2017), President Trump asked USTR to begin the Section 301 process. The basis of the 301 was due to China’s”abusive trading practices with regard to intellectual property and innovation.”
2. USTR conducted investigation, published 200 page report showing: “China has been engaging in industrial policy which has resulted in the transfer and theft of intellectual property and technology to the detriment of our economy and the future of our workers and businesses. ”
3. The USTR also found these “practices are an existential threat to America’s most critical comparative advantage and the future of our economy: our intellectual property and technology.”

To view the Federal Register notice and list of proposed tariffs on $200 billion of Chinese imports, click here.

If you have any questions how these 301 tariffs may impact your business, or if you would like to submit comments to the US Government, please contact experienced trade attorney David Hsu at 832-896-6288 or by email at dhsu@givensjohnston.com.

Tesla raises car prices in China amid potential US/China trade war.

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Reuters is reporting the price of Model S and Model X Tesla vehicles have increased by over $20,000 in China. Reuters cites the website Electrek’s report on Monday.

China already raised tariffs on U.S. car imports in response to President Trump’s move on imposing tariffs on $34 billion worth of Chinese goods.

The raise in prices in China come after a decrease in prices as recently as this past May – when Model X vehicles were discounted $14,000. Electrek reports that 17% of Tesla’s 2017 revenue was from China sales and that Tesla estimates shipping 15,000 cars a year to China.

 

ZTE pays $1 billion fine, $400k into escrow soon.

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According to CNN Money, ZTE has paid the $1 billion dollar fine and will place an additional $400,000 into escrow soon.

This current payment of $1 billion is on top of the $1 billion ZTE paid last year.

Check back for more ZTE developments.

Check out my other ZTE-related blog posts:

In-depth details of the ZTE deal.

Senate passes amendment to undo Trump’s ZTE deal.

Deal reached between the US and ZTE.

ZTE facing $1.7 billion penalty?

The real reason Trump is working to reverse the 7 year ZTE ban? To help U.S. companies!

CNBC reports the US and ZTE are working on alternatives to the denial order issued against ZTE back in April of this year.

ZTE estimated to lose $3.1 billion due to US sanctions (Bloomberg).

Deal reached to allow ZTE to purchase U.S. hardware and software?

ZTE may need to change management and board in order to access US suppliers.

ZTE report to the HKEX on the impact of the US denial order: “major operating activities of the Company have ceased”.

ZTE and Huawei banned for sale to US military personnel.

ZTE banned from purchasing US technology for 7 years.

In-depth details of the ZTE deal.

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By ZTE Corporation (Own work (vectorized)) [Public domain or Public domain], via Wikimedia Commons

Most media reports of the ZTE deal stop only mention the $1 billion dollar fine and $400,000 to be placed in escrow.

I thought this reporting was a little lacking in details, so I went ahead and read the details of the ZTE deal and summarized them below:

1. Pay $1,000,000,000.00 within 60 days of June 8, 2018.

2. Pay $400,000,000 to escrow within 90 days of June 8, 2018 to a US headquartered bank selected by ZTE and approved by BIS.
-10-years probationary period.
-$400,000,000 will be returned to ZTE after 10 years.
-Records maintained and retained in the US or fully accessible from the US.
-Comply with all other terms and committed no other violation.
-Comply with OFAC settlement agreement.
-If ZTE is found to be non-compliant, then the $400,000 goes to BIS.
3. ZTE has 30 days to retain and their expense an “special compliance coordinator” (SCC)
-The SCC will be in place for 10 years
-If there is a change to any SCC, the replacement must be made within 30 days
-ZTE can’t hire an SCC to join ZTE until 5 years after the agreement ends.
4. ZTE must complete 9 audit reports to show compliance with US export control.
-Independent compliance monitor performs the first 4 audits.
-SCC completes remaining 6 audits
5. All records must be stored-in or fully accessible from the US.
6. ZTE must allow the US Gov’t to verify adherence to their export control compliance program.
-ZTE needs to provide export compliance training to leadership, mgmt, employees.
-ZTE needs to provide BIS copies of training materials until January 1, 2021.
-Implement export compliance program within 6 months.
-Replace entire Board of Directors
-Terminate all current senior leadership of ZTE and ZTE Kangxun.
-30 days after replaceing BOD, ZTE needs to create audit/compliance committee.
-Within 90 days of order, ZTE needs to detail all Chinese government ownership and control of ZTE, including stock ownership.
-Within 180 days, ZTE needs to publish online the classification under the regulations, publish in English and Chinese.
-Within 4 years, ZTE needs to hold 2 public symposia in China regarding export control compliance.

7. Full and timely payment of civil penalties.

8. For 10 years, ZTE cannot participate in any transaction involving any item exported or to be exported from the US that is subject to the Regulations.

9. ZTE cannot export or re-export to or on behalf of a denied person.

10. Any one related to a denied person also subject to the order.

11. 10 year denial period suspended as long as ZTE pays the penalties. If ZTE violates terms, then a 10-year denial period from the date it is determined that ZTE has failed to comply.

12. ZTE cannot make a statement directly or indirectly denying allegations in the: proposed charging letter, the March 17th settlement agreement, the June 2018 agreement or the superseding order.
-ZTE needs to consult with BIS regarding any press releases

13. ZTE should fully cooperate with BIS, DOJ, OFAC regarding production of documents and witnesses.
-ZTE must be truthful in disclosures to BIS.
-ZTE must make available for interview deposition or testimony of employees current and former as needed.
-ZTE to notify BIS of any violations during the 10-year probationary period.
14. The ZTE order is to be made public.

PLEASE NOTE: The Senate added an amendment in the National Defense Authorization Act for Fiscal Year 2019 that would reverse the ZTE deal if passed. The amendment passed the Senate on Friday the 15th and is now in the House.

My thoughts: I don’t believe the Senators supporting the amendment to the NDAA have read the entire settlement with ZTE. My guess is the Senators only read the “$1 billion” dollar fine.

The US/ZTE deal is good for several reasons:
1. This deal keeps ZTE in business.
2. If ZTE is in business, US companies that supply to ZTE will benefit (Qualcomm, Google, etc).
3. This agreement is the FIRST (and likely the LAST time that the US Government will have any oversight of a Chinese company. I don’t think the Senators understand how unusual this is. Oversight by the US government of a large Chinese company will never happen again.
4. This deal allows the US to ensure no export controlled technology is sent by ZTE to a denied country for the next 10 years.

 

Trump proposes further tariffs on $200 billion worth of Chinese goods.

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Official Portrait of Ambassador Robert E. Lighthizer

US Trade Representative (USTR), Robert Lighthizer released a statement supporting Trump’s request for the USTR to identify $200 billion worth of Chinese goods for an additional 10% in tariffs.

This follows Trump’s announcement last Friday of a 25% tariff on $50 billion in Chinese goods to counter what Trump claims to be “China’s theft of intellectual property and technology and its other unfair trade practices”.

Lighthizer’s full statement reads:

“I support the President’s action. The initial tariffs that the President asked us to put in place were proportionate and responsive to forced technology transfer and intellectual property theft by the Chinese. It is very unfortunate that instead of eliminating these unfair trading practices China said that it intends to impose unjustified tariffs targeting U.S. workers, farmers, ranchers, and businesses. At the President’s direction, USTR is preparing the proposed tariffs to offset China’s action.”

Call David Hsu if you have any questions on how US and Chinese tariffs may impact your business, 832-896-6288 or mail at dhsu@givensjohnston.com.

White House imposes tariffs on $50 billion of Chinese goods.

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As expected, the administration announced Section 301 tariffs on about $50 billion worth of Chinese goods with two purposes: (1) balance the trade relationship between the US and China and (2) prevent the transfer of American technology and intellectual property to China when US businesses operate in China.

After the announcement this morning, China responded by issuing their own tariffs on 659 types of goods from the US starting on July 6th. When announcing the initial $50 billion in tariffs, Trump also indicated any Chinese retalation will also be met with additional US tariffs.

Cliff Notes version of today’s developments:

  1. 2/3rds of the US duties on 1,102 types of goods begins July 6th.
  2. The goods announced on Friday will apply later after a review period ends.
  3. The US imposed these tariffs to limit the transfer of technology to China.
  4. Some lawmakers say these tariffs will only impact the average American due to higher prices.
  5. The first list of goods subject to tariffs can be found here.
  6. The second list of goods subject to tariffs can be found here:

Whether or not these announcements are posturing on both sides, check back for more details.

If you have any questions on how these new tariffs will impact your import or export business, contact experienced trade attorney, David Hsu at 832-896-6288 or by email at: dhsu@givensjohnston.com.