Easy to understand version of the Chinese billionaire’s scam to avoid paying duties on aluminum.

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Who is involved:
Chinese billionaire: Zhongtian Liu
His company: China Zhongwang Holdings Ltd.
Key players according to investigators: Zhaohua Chen, Xiang Chun Shao, Perfectus Aluminum Inc, Perfectus Aluminum Acquisitions, four LLC’s that owned the warehouses. A business agent named Po-Chi

What was he importing:
Aluminum pallets that appeared to be “finished” to avoid duties on unfinished aluminum extrusions. The pallets were “spot-welded” to appear to be finished pallets.

Purpose of scam:
Unfinished aluminum is subject to a high rate of duty (up to 400%)

How he scammed Customs:
He imported the aluminum as finished aluminum pallets. Finished aluminum pallets have a lower duty.

How did the scam work?
1. Import aluminum pallets instead of extruded aluminum. Manufactured pallets avoid the duties versus extruded aluminum.
2. The pallets were then stored in warehouses.
3. The pallets were “sold” to entities owned by the billionaire to inflate sales and deceive investors.
4. Investigators believed Liu was going to build a smelting plant to melt the palllets then sell as raw aluminum. The aluminum imported was a higher grade and used in applications such as surgical tools.

How big ($) was the scam?
A total of 2.2 million pallets were imported from 2011 to 2014.
Customs believe the billionaire avoided paying $1.8 billion.

When was the scam discovered?
Started in 2017 with notice of the charges released this week.

What will happen to the people charged?
Probably not much, Liu and the defendants are in China and the US cannot extradite them (no treaty with China).

If you have any questions about limiting your tariff liability the legal way – contact experienced trade attorney David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com, dh@gjatradelaw.com.

Trump threatens tariffs on $300 billion of Chinese imports on September 1st.

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Official portrait of President Donald J. Trump, Friday, October 6, 2017. (Official White House photo by Shealah Craighead)

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:

  1. 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.
  2. 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.
  3. 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%.
  4. Some news outlets report that China may be stalling to sign a trade deal until after the 2020 election.
  5. September 1st would mark an end to a “truce” between the two countries.
  6. China has threatened to respond with their own retaliatory tariffs if Trump goes through with the September 1st deadline.
  7. Trump claims China has not gone through with their promise to buy more agricultural products from the US in large quantities.
  8. Trump also claims China would curtail the shipments of Fentanyl to the United States, but has not and the shipments continue to harm Americans.
  9. 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.
  10. 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.
  11. Analysts claim further duties will only hurt Americans in increasing the prices of goods.
  12. 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: dh@gjatradelaw.com, attorney.dave@yahoo.com or by phone/text at 832-896-6288.

Proposed List 4 of tariffs on Chinese goods.

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The International Trade Administration in early June released a potential “List 4” of tariffs that will apply to Chinese-origin goods. Currently, there are 3 Lists of duties that cover approximately $250 billion in goods from China. List 4 goods covers approximately $300 billion in goods from China and covers more than 3,800 categories of goods such as electronic devices, apparael, home goods, shoes, sporting goods, and mobile phones.

In short, if the proposed duties on goods covered under List 4, then practically all Chinese imports (totaling about $550 billion dollars worth) will be subject to an extra 25% duty.

As with Lists 1-3, before List 4 can be enacted, hearings and a comment period need to occur. Here are important dates for List 4 goods:

June 10, 2019 – deadline to request to appear at a hearing
June 17, 2019 – deadling to submit comments prior to hearing
June 17, 2019 – public hearing with the US Trade Representative
June 24, 2019 – deadline to submit comments following hearing

As in the case of Lists 1-3, there are also goods that are excluded and they include outboard motor engines for boats, some forklifts and some pressure valves. An exclusion process for importers to request exclusion of individual goods has not yet been released.

-If you have any questions on how these List 4 duties will impact your business, contact experienced trade attorney David Hsu at 832-896-6288 or by email at dh@gjatradelaw.com, attorney.dave@yahoo.com.

White House – Tariffs on Imports from Mexico

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Last Friday, President Trump announced tariffs of 5% on Mexican goods starting June 10th with an increase of 5% each month (capped at 25%) until Mexico takes steps to curb illegal immigration to the United States.

The announcement is silent on the treatment of tariffs for NAFTA goods, most likely the 5% would apply to all goods, whether NAFTA eligible or not.

The full release can be found here and more news will be posted as available.

WTO ruling sets precedent for WTO authority to determine whether national-security concerns justify trade restrictions.

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According to Bloomberg on April 5, 2019, the WTO ruled on a Russia and Ukraine dispute that set the precedent for two things: (1) rights of nations to impose trade restrictions on national-security grounds and (2) WTO’s authority to determine whether a national security threat justifies trade restrictions. However, the US hold the position the WTO does not have the power to rule on these two issues.

Ironically, WTO Director-General Roberto Azevedo agrees the WTO should not mediate regional security conflicts, but said the cases were brought to the WTO and that the world body did not have an option.


Personally, I don’t believe China will bring a case to the WTO for the steel and aluminium duties as the US and China are currently reaching a deal. Also, if China and the US bring a case to the WTO, they would further justify and open the door for the WTO’s authority and national-security determination decision making power over any member to the world body.

I believe this WTO decision is a single occurrence likely to not happen again. The WTO is a trade organization and is not capable of understanding, addressing and enforcing regional security issues such as those between Russia and Ukraine.

Will be interesting to see what happens – will post more as updates become available.

Bi-Partisan bill introduced to block 25% tariff on imported cars.

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According to the Detroit News, U.S. Representative, Fred Upton (R) introduced legislation that would stop President Trump from imposing 25% tariffs on cars imported to the US under the premise of threats to America’s national security.

The legislation includes bi-partisan support and would require the International Trade Commission to first conduct a “comprehensive study on the economic importance of automotive manufacturing in America”.

Another argument is that the Trump administration is over stating the claim that cars and auto parts are a threat to national security of the US.

Since Trump proposed the tariffs in May of 2018, the proposed tariffs may be imposed as early as early May if the new legislation passes and becomes law.

More news will be posted as they become available.

US Kitchen cabinet companies petition for anti-dumping duties against Chinese cabinet producers.

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The American Kitchen Cabinet Alliance (AKCA) filed a petition with the International Trade Commission to impose antidumping duties and tariffs on imports of cabinets from Chinese manufacturers.

The AKCA claims the $10 billion cabinet industry is being harmed by imports of cabinets from Chinese manufacturers. The AKCA claims U.S. cabinet manufacturers have seen poor financial performance despite a 12.5% increase in the number of housing units completed in the U.S. The AKCA blames cheap imports from China for their financial decline.

The petition to the ITC by AKCA claims the kitchen cabinets from China are also sold at a below normal value and the AKCA is requesting an ADD rate of 175.5% to 259%.

If you are an importer or manufacturer of kitchen cabinets and ahve questions how the investigation on kitchen cabinets may impact you, contact attorney David Hsu at attorney.dave@yahoo.com or by text/call at 832.896.6288.

List 3 Exclusion Process?

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Last October, 10 10 senators sent a letter to the United States Trade Representative (USTR) inquiring why a List 3 exclusion process had not yet been established. As you are aware, an exclusion process allows importers or interested parties of goods subject to the Section 301 duties to petition to have their goods excluded from the tariffs of 10-25%.

Earlier this week, the USTR replied indicating an exclusion process will not start on List 3 unless negotiations fail with China and the tariffs are raised on the $200 billion worth of goods from 10 to 25%. Both China and the US have agreed to a “truce” until March 2, 2019.

Will update as soon as any updates are available. If you have any trade, import, export, trade or compliance attorneys, contact experienced trade attorney David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com

China suspends 25% tariff increase on US vehicles and auto parts.

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According to the Associated Press this morning, China announced a 90-day suspension of increased tariffs on $126 billion of US cars, trucks and auto parts.

The suspension on Friday was likely a response to President Trump’s December 1st decision to suspend tariff hikes that were set to begin January 1st. These initial China tariffs of 25% were in response to Trump’s 25% tariff on $50 billion of Chinese goods.

The US and China are still working on a solution to solving the trade dispute but no face to face negotiations have been set. Check back for more details as they are available.

Taiwan – beneficiary of the US-China trade war.

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According to the Taipei Times, a beneficiary of the US-China trade war may be Taiwan. With tariffs of 10-25% on goods from China, some of Taiwan’s tech companies are exploring options of moving back to Taiwan – specifically the city of Taoyuan. Taoyuan is half an hour south of Taiwan and home to the Taoyuan International Aiport (Chiang Kai-Shek (CKS) Airport).

Several Taiwanese companies such as iPhone assembler Pegatron, laptop maker Compal Electronics and Apple supplier Inventec are adding capacity in Taoyuan. Even Quanta Computer is back in Taiwan seeking factory land.

30 years ago, Pegatron, Compal, Inventec and Quanta along with countless other Taiwanese companies moved to China due to lower production costs. In fact, 15 of the top 20 exporters from China to the US in 2016 initially originated from Taiwan.

If you have any questions how the 232 or 301 duties may impact your business, contact experienced trade law attorney David Hsu at 832-896-6288 or by email at attorney.dave@yahoo.com