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USTR Outlines Procedure for Exempting China Imports from New Tariff

Photo: VCG
Photo: VCG

Some of the products on the list of Chinese imports subject to a new 25% tariff from Friday may be exempted from that penalty, the U.S. Trade Representative (USTR) Office said Friday, announcing the procedure for applying for such exclusions.

The announcement came hours after the two countries exchanged fire in what China described as the “largest trade war in economic history.”

However, the exclusion of a few products would be only a fine-tuning of the tariff list and not significantly change the thrust of the U.S. government plan to levy the higher tariff on more than 800 kinds of Chinese products worth $34 billion, observers said.

The U.S. tariffs, targeting a range of Chinese goods, including aerospace, information technology, medical care and automotive products, took effect at 12:01 p.m. Beijing time, or just after midnight U.S. Eastern Time, on Friday. Simultaneously, China retaliated by imposing a 25% tariff on 545 kinds of American imports with the same total value.

In a modest attempt to soften the blow, the USTR announced later Friday that companies will have the opportunity to request exclusions from the new duty for certain products. Requests must be submitted within 90 days, and any exemptions granted would last one year, retroactive to July 6, the day the tariff where implemented.

The USTR will determine whether a product qualifies for an exemption based on whether it is also available from other countries, whether the additional tariff may seriously harm the requester or other U.S. interests, and whether the particular product is “strategically important” or related to a Chinese industrial initiative, including the “Made in China 2025” program, which is designed to upgrade China’s technological manufacturing capabilities, according to a statement on the U.S. government agency’s website.

Because each product category on the list subject to the tariff may include a number of similar but distinct products, the list may include products that U.S. companies cannot obtain from countries other than China, a U.S. government official explained in a briefing on June 15. If this is the case, U.S. companies can apply for an exemption of that product from the new tariff.

Friday’s USTR statement emphasized that a particular product may be excluded from the additional duty, but not other products in the same product category.

The tariff list that took effect Friday contains 818 product categories, which was reduced from the initial 1,333 product lines after months of public debate.

An international trade lawyer who asked to remain anonymous told Caixin that the announcement of the tariff exclusion procedure and a public hearing in two weeks should prompt the participation of parties affected by the tariff.

“They need to realize that if you speak up about what you want, you have a greater chance to remove certain products from the list,” the lawyer said, adding that it is likely to be easier to win exemptions for consumer products than for industrial products.

In addition to retaliating with its own duties on U.S. imports, China on Friday filed a second complaint at the World Trade Organization (WTO) over the new U.S. tariff. China also filed a WTO complaint against U.S. tariffs imposed on imported steel and aluminum on June 1, as did the European Union, Canada, Mexico, Russia, and India.

Contact reporter Wu Gang (gangwu@caixin.com)


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