Many U.S. importers "tend to just assume things are on the up and up" with their vendors, said Pete Mento, vice president for global trade and managed services at Crane Worldwide Logistics. Mento, who conducted a webinar on free trade deals May 24, said that's a mistake. Mento said often "people are claiming free trade agreements simply because it was flown to the U.S." from a free-trade partner country. "You gotta be able to prove your stuff qualifies. Because if you can’t prove it, the government’s going to come down on you like the hammer of the gods," he said.
Treasury Secretary Steven Mnuchin, who faced many critical questions from House Democrats on the China trade war, told them that consumer goods were left until last for a reason, and that a decision on levying tariffs on the remaining imports from China -- including toys, apparel, cellphones and computers -- has not yet been made. “There won’t be any decision probably for another 30 to 45 days," Mnuchin testified at the Financial Services Committee May 22. He said that he had recently spoken to the chief financial officer at Walmart about the increase in tariffs on the third tranche of Section 301 tariffs and the possibility of tariffs on nearly all remaining imports.
The Section 301 tariffs on Chinese imports “has been a fluid situation for quite some time now,” and Target is “monitoring this very carefully,” CEO Brian Cornell said on a fiscal Q1 earnings call May 22. “As we think about tariffs, we reflect on the impact it could have and will have on American families that are going to be paying higher prices,” he said. Target’s supply-chain “teams have done a very good job of trying to mitigate the impact in the short term,” he said. That Target has a “multi-category portfolio” gives it a “huge advantage in this environment,” he said. “Our ability to flex our focus from category to category is something that’s somewhat unique to Target versus single-category retailers.” Target also has “some very sophisticated vendor partners that for years now have been working to diversify their manufacturing base,” he said.
The Trump administration remains “on track to hit the industry” with 25 percent Section 301 tariffs on $300 billion in Chinese goods not previously dutied because trade talks with China “have deteriorated” in the past two weeks, emailed the Sports & Fitness Industry Association to members May 22. “Both sides have retreated to their corners and dug in, with no clear pathway for resolution in the immediate future,” it said. The next possible breakthrough in the talks could come at the G-20 summit June 28-29 in Osaka, Japan, where presidents Donald Trump and Xi Jinping are scheduled to meet, SFIA said. SFIA is organizing a petition drive for members to urge the removal of apparel, footwear, smartwatches and fitness trackers from List 4.
The top Democrat on the Senate Finance Committee told U.S. Trade Representative Robert Lighthizer in a May 22 letter that panel blocking is a mistake, and that trying to use Section 301 tariffs to enforce trade commitments of Canada or Mexico won't work. Sen. Ron Wyden, D-Ore., wrote: "So far, the Administration’s justification for this mechanism has only increased my worry that the new Agreement will not be enforced." He acknowledged "certain improvements" in the labor and environment chapters, but said, "all of the obligations become meaningless if the United States cannot effectively and swiftly enforce them."
A 25 percent tariff on shoes from China "would be catastrophic for our consumers [and] our companies," according a letter signed by more than 150 European and U.S. shoe manufacturers and shoe retailers, which was sent to President Donald Trump May 20. Footwear is not currently on the Section 301 list, but the president is considering adding tariffs on all Chinese imports.
The Office of the U.S. Trade Representative plans to open the product exclusion process for the third tranche of Section 301 goods "on or around June 30," the agency said in a notice. The notice is a request to the Office of Management and Budget asking for expedited approval for an information collection for the exclusion process that was announced as part of the tariff increase for the third tranche of goods from China (see 1905080035). "USTR is establishing a process by which U.S. stakeholders can request the exclusion of particular products classified within a covered tariff subheading from the additional duties that went into effect on September 21, 2018, and May 10, 2019," the agency said. "USTR anticipates that the window for submitting exclusion requests will open on or around June 30, 2019. Requests for exclusion will have to identify a particular product and provide supporting data and the rationale for the requested exclusion. Within 14 days after USTR posts a request for exclusion, interested persons can provide a response with the reasons they support or oppose the request. Interested persons can reply to the response within 7 days after it is posted."
International Trade Today is providing readers with some of the top stories for May 13-17 in case they were missed.
The International Trade Commission recently issued two updates to the Harmonized Tariff Schedule to reflect changes for Section 301 tariffs on products from China. In Revision 4, the ITC implemented the increase in duties on tranche three of goods subject to the tariffs from 10 to 25 percent, as announced in early May (see 1905060040). The increase in duty rates for subheadings 9903.88.03 and 9903.88.04, as well as U.S. Notes 20(e) and 20(g) to subchapter III of chapter 99, took effect May 10. The subsequently issued Revision 5 implemented a new batch of exclusions from tranche one of the tariffs under new subheading 9903.88.08 and U.S. Note 20(k) to subchapter III, and made conforming changes to U.S. Note 20(a) and U.S. Note 20(b). It also implemented new subheading 9903.88.09 for goods subject to tranche three of duties that are still subject to a 10 percent duty because they were exported from China before May 10 and entered before June 1. U.S. Note 20(l) explains the new provision. Also in Revision 5 but unrelated to Section 301 tariffs, the ITC updated Statistical Annexes A and B of the HTS to reflect the new name of North Macedonia.
A Chinese Foreign Ministry spokesperson sidestepped questions at a Beijing news conference May 17 about media reports suggesting new U.S.-China trade talks are off the table for now. Presidents Donald Trump and Xi Jinping “have maintained contact through various means,” the spokesperson said. The Office of the U.S. Trade Representative didn’t comment. The U.S. and China “intend to continue further discussions,” a USTR notice in the Federal Register said, officially proposing the 25 percent Section 301 tariffs on $300 billion in Chinese goods not previously dutied. Requests to appear at public hearings on the proposed List 4 tariffs are due June 10 in docket USTR–2019–0004 at regulations.gov, and written comments are due June 17, the same day the hearings are set to begin. Post-hearing rebuttal comments are due seven days after the hearings end.