This past Wednesday, Japan downgraded South Korea’s preferential trade status – requiring Japanese manufacturers to now apply for approval for technology-related goods to be exported to South Korea. Japan claims the trade status of South Korea was needed over concerns the technology could be used for military purposes. Prior to Wednesday, exports to South Korea required less compliance as a preferential trade partner. South Korea also announced their action to downgrade Japan’s trade status to take effect later this month (September).
As previously posted on this blog, South Korea accuses Japan using trade as retaliation in responses to court decision granting compensation to individuals who were victims of forced labor during Japan’s occupation of Korea. The AP reports leadership from both countries are working on an agreement.
Citizens from both countries have also joined in street protests and boycotting goods from either country.
The Trump administration has postponed the levying of 10% tariffs on List 4 goods covering $300 billion in imports from China until December 15th. The initial date of September 1st was postponed after reports of a phone call with Beijing.
A new round of trade talks will be held in September after this month’s talks did not result in a trade deal.
There is still time to lower your import risk, if you would like solutions to lowering the duties you need to pay, contact experienced trade attorney David Hsu at 832-896-6288 or by email at firstname.lastname@example.org, email@example.com.
According to the Wall Street Journal, the Treasury department’s tariffs is expected to generate almost $72 billion in tariffs through June of this year. This number will likely go much higher if the “List 4” duties take effect on September 1st. On September 1st, over $300 billion in Chinese goods will be subject to a 10% tariff with a potential to increase to 25%.
Specifically, as of June 30th, the Treasury department has collected $63 billion in tariffs over the past 12 months. In contrast, prior to the trade war, the US only brought in $30 billion dollars.
The WSJ estimates the annual generated amount can be as high as $100 billion by the end of the year once the 10% duties are placed on over $300 billion worth of imported goods from China.
If you have any questions how the current 301 duties or proposed List 4 duties will impact you, contact experienced trade attorney David Hsu at 832-896-6288 or by email at firstname.lastname@example.org, email@example.com.
According to the Washington Post, China let the exchange rate for the yuan to fall below seven per dollar. A weak Chinese currency has the effect of increasing the country’s exports, hurting foreign competitors.
The WP further quotes People’s Bank of China blaming the decline on “trade protectionism,” a reference to the ongoing trade dispute between the US and China. The remainder of the article lists the various markets world wide and the subsequent decline since China’s announcement.
As previously blogged, China will take other measures in response to the trade war besides imposing their own duties on US imports. China has currently imposed duties covering 110 billion US goods, and can only impose an additional duty on $50 billion before China covers all of the $160 billion in US goods last year.
Since the US eased restrictions on supplying components to Huawei, the largest US chimpaker, Intel, said they have begun selling products to Huawei “within the rules of the law”. Additionally, Intel says they are also requesting an export license to sell “general purpose computing” chips to Huawei that do not pose a national security risk.
As you are aware, the Trump administration raised concerns regarding the use of Huawei technology may contain backdoors that would allow the Chinese government to spy on users, posing a national security risk. As a result, the US Department of Commerce added Huawei to their entity list this past May. Inclusion on the entity list precluded Huawei from buying parts and components from American companies without US government approval (an export license).
However, after the Trump met with Chinese President Xi Jinping at the G20 summit last month, President Trump said that US firms can resume selling equipment to Huawei.
Additionally, earlier in July, Commerce Secretary Wilbur Ross announced an easing of restrictions against the Chinese company in line with Trump’s statements after the G20 summit, stating that the US would issue licenses to US companies looking to sell to Huawei as long as the sales do not pose a threat to national security. An export license would still be required as Huawei has not been removed from the entity list.
If you have any questions whether your company can continue to do business with Huawei, contact experienced export compliance attorney David Hsu at 832-896-6288 or by email at firstname.lastname@example.org, email@example.com.
According to the Associated Press, earlier today, China threatened the US with retaliation if Trump goes through with his threat to impose sanctions on “List 4” of goods from China on September 1st.
The primary issues of disagreement between the US and China are the forced technology transfers that are required by US companies doing business in China in addition to the lack of intellectual property protections for companies doing business in China. Additionally, the US has also expressed concerns over China’s 2025.
At the current time, the US has imposed tariffs over $250 billion in Chinese imports while the China has imposed tariffs on over $110 billion in US goods. The proposed September 1st tariffs cover over $300 billion in goods – effectively covering all imports of goods from China. The US government may have an upper hand as China only imported about $160 billion in US goods – a number that highlights the unequal trade balance ($160 billion versus $550 billion).
It will be interesting to see how China retaliates, they can only threaten to impose an additional $50 billion in tariffs on US goods, only 1/6th of the what the US can impose.
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: firstname.lastname@example.org, email@example.com or by phone/text at 832-896-6288.