Tariffs on Chinese Goods Increase from 10 to 25 Percent

As anticipated, tariffs on $200 billion of Chinese goods increased from 10 percent to 25 percent at 12:01 am EST on Friday, May 10. The increase took effect as U.S. and Chinese officials continued negotiations in Washington. China’s Ministry of Commerce has indicated that it will retaliate, but did not specify how or when. It seems likely that they will respond by increasing existing tariffs of 5-10 percent on $200 billion worth of U.S. imports, including hardwood lumber and lumber products, to 25 percent. Tariffs on additional Chinese products could come in the next 3 to 4 weeks according to Administration officials.

Although reports over the last few weeks indicated that negotiations had been proceeding in a positive direction with an agreement anticipated as early as this week, the President tweeted on Sunday that China had begun to walk back on important commitments made during the negotiation process, triggering the Administration’s decision to increase tariffs.  U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin confirmed this setback in comments to the press on Monday night.

Official notification of the tariff increase was published yesterday by the U.S. Trade Representative’s office. The notice amends the Harmonized Tariff Schedule of the U.S. to provide that the tariff increase for the $200 billion in goods will be effective with respect to Chinese goods (a) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EDT on May 10, 2019, and (b) exported to the U.S. on or after May 10, 2019.

In addition, the administration issued a clarification indicating that the lower 10 percent tariff will apply to Chinese goods that enter the U.S. prior to June 1, 2019. While this only applies to Chinese goods at this point, it is possible that the Chinese will respond in kind as they have in the past. There is also some expectation that the Chinese could impose non-tariffs measures in response to the U.S. action.

There is very little being reported out of this week’s discussions at this time other than they were “constructive” and that the next round of negotiations is likely to be scheduled “soon,” probably in Beijing.

Source: The Hardwood Federation

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