U.S. and China Trade Tariffs – 2020 Update

Following the signing of the US-China Phase One trade deal yesterday, USTR has published the full text of the deal. Both the US and China have agreed to cancel additional tariffs under Section 301 Tariff Lists 4B scheduled to enter into effect on 15 December 2019. China has promised to increase purchases of US agricultural and energy products, as well as adopting policy changes related to intellectual property and forced technology transfers.

In return, the US lifted its designation of China as a currency manipulator. USTR also announced tariff reduction for products on US Section 301 List 4A from 15% to 7.5% will take effect on 14 February 2020, so this will provide some relief on Section 301 List 4A tariffs imposed on packaging and food processing equipment imported from China. Please see the Federal Register Notice published by USTR regarding List 4A tariff reduction.

In terms of the other Section 301 tariffs imposed (including List 3), President Trump said during the news conference and signing yesterday:

“We’re leaving tariffs on, which people were shocked by, but it’s great.  I will agree to take those tariffs off if we are able to do Phase Two…but I am leaving them on because otherwise we have no cards to negotiate with and negotiating with [the Chinese] is very tough.  But they will all come off as soon as we finish Phase Two.”

USTR has indicated it wants to focus on monitoring implementation of Phase 1.  No visibility as to when Phase 2 negotiations will begin in earnest or conclude, and therefore, List 3 and List 4A (reduced) tariffs will remain in place for the foreseeable future.

As a reminder, below are products currently targeted under US Section 301 List 4A:

PMMI Imports from China Targeted on US Section 301 Tariff List 4A - US Import for Consumption In USD

Hts Num

Description

US Section 301 List#

Additional Tariff Rate on top of MFN

2018 Import Value from China

8422.90.02

Water containment chambers for the household dishwashing machines and other parts of the same incorporating water containment chambers

4A

15%

- 7.5% decrease (effective 14 February 2020)

$101,485

8422.90.11

Parts of can-sealing machines

$467,318

8422.90.21

Parts of machines for packing tobacco, wrapping candy, cigarette packages and of combination candy cutting and wrapping machines

$169,544

8438.10.00

Bakery machinery and machinery for the manufacture of macaroni, spaghetti or similar products, nesoi

$8,233,952

8438.20.00

Machinery for the manufacture of confectionery, cocoa or chocolate, nesoi

$2,963,752

8438.30.00

Machinery for sugar manufacture, nesoi

$427,118

8438.40.00

Brewery machinery, nesoi

$35,299,904

8438.90.10

Parts of machinery for sugar manufacture, nesoi

$747,831

Subtotal of PMMI Imports on US Section 301 List 4A

$48,410,904

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