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China: Additional tariffs on $60 billion worth of U.S. imports

China: Additional tariffs, $60 billion of U.S. imports

China’s government on 13 May 2019 published a circular that announces increases to the tariffs on certain U.S. imports, effective 1 June 2019.

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The increased tariffs are being imposed on approximately $60 billion worth of goods originating in the United States and imported into China. The tariffs are in response to tariff actions by the United States under Section 301 of the Trade Act of 1974.

China’s Tariff Committee Circular (2019) No. 3 announces the increases of the retaliatory tariffs on $60 billion worth of U.S.-originated goods imported into China and based on four lists of commodities. These four lists include more than 4,000 categories of eight-digit tariff codes. The identified products will be subject to retaliatory tariff rates of 5%, 10%, 15%, and 25% (originally announced in August 2018), compared to the current effective customs duty rates of 5% and 10%. 

Exclusion process

China’s Ministry of Finance also on 13 May 2019 issued a release about a “trial” exclusion process for additional tariffs on U.S. importsThis process is reported to be similar to one provided in the United States, in that it stipulates the applicable scope and detailed application procedure for Chinese importers that would like to claim an exclusion from the retaliatory tariff provisions.

Under this exclusion process, the timeframe of application of an exclusion would be:

  • 3 June to 5 July 2019—for the first batch of imports subject to the $34 billion list and $16 billion list
  • 2 September to 18 October 2019—for second batch of imports subject to the $60 billion list

Imports that were already excluded from retaliatory tariffs (or that temporarily have ceased to be subject to retaliatory tariffs, such as vehicle and auto parts of U.S. origin) are not within the scope of the new exclusion process.

  • Period for an approved exclusion: The period during which an exclusion is valid will be one year after the date of approval. Importers may apply for a refund of the amounts of any retaliatory tariff within six months after the imports are approved for the exclusion. 
  • Considerations by the China government when assessing the exclusion application: (1) the importer cannot find substitutive products from other countries outside of the United States; the additional tariff duties would cause severe economic harm to the requestor; (3) the additional duties would cause severe structural implications (including the development of particular industry, technology development, employment, environment protection) or “negative consequences” to Chinese society.

 

For more information, contact a KPMG trade and customs professional in China:

Eric Zhou | +86 10 8508 7610 | ec.zhou@kpmg.com

Rachel Tao | +86 21 2212 3473 | rachel.tao@kpmg.com 

 

To learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Managing Director
T: 202-533-3247
E: aahanchian@kpmg.com

Robert Waldrop
Principal
T: 212-954-8117
E: rwaldrop@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

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