【Economic Perspectives】US-China Trade Dispute - US new tariff exclusion sets positive tone for truce

US will soon start a new round of exclusion process for Chinese products on the US$300bn list from 31 Oct 2019 to 31 Jan 2020, the 15th batch of exclusion by far in the process of reviewing claims by companies that their imports are not available outside of China and that the tariffs otherwise harm US interests. In addition, US will commence on 1 Nov 2019 a process for considering extending the first exclusion batch which is set to expire on 28 Dec 2019. Both actions aim to protect US industries and economy, while they also radiate positive signals to China as both sides are close to finalizing a “phase one” deal. However, huge hurdle remains before the cancellation of additional tariffs by US government.

 

  • The latest round of product exclusion will start soon. Trump announced on 1 Aug to impose additional 10% tariff on US$300bn worth of Chinese goods (List 4) in two stages, from 1 Sep (List 4A) and 15 Dec (List 4B) respectively. On 23 Aug, US government increased the rate from 10% to 15%. From 31 Oct 2019 to 31 Jan 2020, the application for tariff exclusion in List 4A will start, during which related parties in the US, including companies and third parties such as law firms, trade associations and customs brokers, can request for exemption at the US Trade Representative (USTR) website. USTR will evaluate each request on a “case-by-case basis” by considering the relevant criteria and seeking opinions from other interested parties. Any exemption will be effective for one year, starting from 1 Sep 2019. Under List 1 and 2, USTR has denied about 61% of more than 13,000 requests.

 

 

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