Goldman Sachs told clients that the U.S. trade war with China could lead firms to invest, hire or produce less, according to reports about the note, sent Aug. 11. Economists at the firm now estimate the tariffs will create a 0.6% drag on the economy, up from an earlier prediction of 0.2%, and are forecasting fourth-quarter GDP growth of 1.8%, down 20 basis points. They also expect the List 4 tariffs to go forward as announced, starting on Sept. 1.
The escalating trade rhetoric between the U.S. and China should make all companies “realize (if you have not already) that this is not a temporary dispute and is not likely to be resolved anytime soon,” customs lawyer Ted Murphy with Baker & McKenzie blogged on Aug. 9. “The two sides are doubling down and digging in.” With 2020 elections “inching closer” and China’s 70th birthday of the People's Republic festivities set for October, “the political considerations associated with these events make it less likely that a deal will be reached,” he said. “As a result, companies should be re-examining/re-adjusting their supply chains and pursuing additional Section 301 mitigation strategies,” while taking “a view to the medium/long term,” Murphy said.
The final list of goods subject to the latest round of Section 301 tariffs will likely be out in days, and duties will probably remain in place for the foreseeable future, given the current state of U.S.-China trade negotiations, trade consultant David Trumbull of Agathon Associates said in an Aug. 8 post on his blog Textiles and Trade. “In view of short time before the tariffs are anticipated and the fact that [the Office of the U.S. Trade Representative] has already gathered public comments and testimony and started analysis, that USTR will likely issue the final list 4 within a few days,” he said. “Based on our observations from lists 1 through 3, we believe it unlikely that USTR will remove much from list 4. We also believe that, given the current state of U.S.-China trade talks, which are at the coldest ever, there is little likelihood of averting tariffs, meaning the September 1, 2019, [start] will likely stick. Finally, in view of the way List 3 went from 10% to 25%, we believe that if this trade dispute continues into 2020, there is substantial risk of 25% tariff of list 4,” Trumbull said.
Generalized System of Preferences program duty savings in June fell by about 18 percent compared with June last year, to $66 million, the Coalition for GSP said in a blog post. That decline seems to reflect the first full month without Turkey's eligibility in the program (see 1905170075) and slightly less than a month without India's eligibility (see 1906050043). "The $15 million year-over-year drop was the largest decline in GSP savings since the 2008-2009 financial crisis," the group said. While the savings from other countries grew by about 23 percent, or $12.5 million, that wasn't enough to offset the losses of India and Turkey, the group said. Using state-specific data, in many cases the "declines were wholly attributable to lost GSP for India and Turkey, leaving little chance that savings will bounce back in July," it said.
Tariffs Hurt the Heartland says importers paid $6 billion in tariffs in June, up $2.5 billion, or 74 percent, from the same month in 2018. The report, based on Census data, covers the first month when Section 301 tariffs on $200 billion in imports from China were at 25 percent rather than 10 percent. The advocacy group also noted that June was the 11th month in a row that American exports targeted for retaliation declined by more than 15 percent.
Although there have been no signs of retail weakness and virtually no signs of inflation from the U.S.-China trade war so far, the National Retail Federation's David French said, "Tariffs thus far have only been on the margin of the consumer economy. What has happened to date has not been indicative of the future." Joann Fabrics and Crafts stores have been on the leading edge of consumer effects, its CEO told reporters Aug. 7 on a conference call organized by the NRF. He said almost half of what they import from China was on List 3, and therefore has a 25 percent tariff.
A third party logistics provider in Toronto will offer a new service to take advantage of Section 321 de minimis exemptions, the company said in an Aug. 7 news release. Stalco, the 3PL, will let "U.S. sellers have their inventory shipped from countries, such as China, directly to Stalco’s distribution centre in Canada," it said. "Where applicable, duty is paid to Canada Customs (CBSA) on the cost of goods," it said. "Stalco then picks, packs and ships the client’s U.S. consumer orders and automatically files for a refund with CBSA on the previously paid duty, on the seller’s behalf. Consumer orders with a value less than US $800 do not attract duty on entry to the USA when imported under the Section 321 clearance type." This service "allows companies to eliminate their duty costs when selling goods directly to U.S. consumers," the company said.
Even at only 10 percent, the List 4 Section 301 tariffs due to take effect Sept. 1 on up to $300 billion worth of Chinese imports “would have a much larger impact on the U.S. tech sector” than the previous three rounds of 25 percent duties, an Aug. 5 S&P Global Ratings report said. The List 4 tariffs would “significantly raise costs for manufacturers and prices for consumers,” much more so than the current tariffs, it said.
The U.S. imported 10.8 million laptops from China in June under the Harmonized Tariff Schedule’s 8471.30.01 product code, according to Census Bureau data accessed Aug. 5 through the International Trade Commission’s DataWeb tool. That’s nearly a 38 percent spike from the 7.8 million shipped here in May and a 49.1 percent increase from the 7.2 million imported in June 2018, the data show.
Avalara, a tax compliance software company, bought Portway International, Avalara said in an Aug. 2 news release. Portway, which is based in Canada "provides customers with Harmonized System classifications and outsourced customs brokerage services." Scott McFarlane, CEO of Avalara, said that by "combining Portway’s experience and knowledge of cross-border compliance with Avalara’s advanced technologies and expansive product content, we can help businesses reach new customers in new regions with confidence.” Terms of the deal weren't released.