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Some Chinese Imports Will Be Cheaper for U.S. Businesses in Spite of This Week's Tariff News. Here's Why.

    Client Alerts
  • September 21, 2018

The U.S. moved forward this week with its threat to place tariffs on $200 billion worth of Chinese imports. The tariffs will kick in this Monday and increase duties by 10 percent on more than 5,700 items, a massive list that ranges from frozen beef to handbags to advanced manufacturing components.

But for impacted businesses, there is somewhat of a silver lining as a result of a bipartisan effort in Congress. The U.S. House and Senate resolved their differences on the Miscellaneous Tariff Bill Act earlier this month, and President Donald Trump signed it into law last week. The bill lowers tariffs on roughly 1,700 items, including many raw materials on the new list aimed at China.

So what happens to items on both lists? For most, tariffs will increase but not as much as they would have without the bipartisan law. But for certain products, tariffs will in fact go down even with the Chinese trade war. The picture is complicated somewhat by the effective date of the Miscellaneous Tariff Bill Act. Here’s an example to illustrate:

  • Today, Chinese imports of a certain type of woven fabric (subheading 5512.99.00 of the Harmonized Tariff Schedule) face a 12 percent duty.
  • On Monday – when the new U.S. tariffs take effect – those imports will face a 22 percent duty.
  • But in mid-October – when the Miscellaneous Tariff Bill Act kicks in – the tariff on those imports will drop to 10 percent. That’s because the bill eliminates the original 12 percent duty, so the extra 10 percent aimed at China is all that’s left.
Although there are other items like the one above that will face lower tariffs in mid-October than they do today, they tend to be the exception. Many of the items impacted by the Miscellaneous Tariff Bill Act currently face duties of less than 10 percent. For those, the increase from the new tariffs will outweigh the decrease from the bipartisan law.

Another important thing to note is that the 10 percent tariff on Chinese imports will rise to 25 percent next year if the U.S. and China cannot reach an agreement. Obviously, at that point, all products on both lists will be more expensive for manufacturers who rely on foreign imports, although the Miscellaneous Tariff Bill Act will at least dampen those effects.

You can find the full list of items impacted by the Miscellaneous Tariff Bill Act here and the full list impacted by the tariffs aimed at China here. You can also check the current tariff rates – before either of the above takes effect - here. In addition, you can find information about how to navigate the cumbersome, time-consuming exclusion process here.

For more information about the tariffs and how to minimize their impact on your business, please contact Parker Poe.