Is it a Christmas Miracle or are we Scrooged?
Last week, the United States and China entered the first phase of a trade agreement commencing a resolution to the ongoing trade war. Over the course of the disagreement which began in March 2018, the Office of the United States Trade Representative (USTR) implemented tariffs on $550 billion worth of US imports from China. As a result, American importers frontloaded their cargo and began diversifying their supply chains to avoid the additional duty.
Preliminary discussions between the two world powers indicate China will import an additional $200 billion in US exports by the end of 2021, including $40 to $50 billion in agricultural exports, if the deal is signed. Critics of the trade war argue there will be no way to ensure China meets that import quota, but that remains to be seen.
Due to this agreement, the List 4B tariff, which was to be assessed beginning December 15, has been indefinitely suspended. Additionally, duty on List 4A is to be reduced to 7.5%, though US Customs & Border Protection will continue to assess tariffs on Lists 1, 2, and 3 at the same 25% duty rate.
Participants of the trade deal claim Phase One could be signed off on as early as this January. While that is an ambitious timeline, our OEC Group Customs Brokerage experts remain optimistic that agreement will be reached.
USTR Publications:
List 1 (Effective July 6, 2018)
List 2 (Effective August 23, 2018)
List 3 (Effective September 24, 2018)
USTR Announces Next Steps on Proposed 10 Percent Tariff on Imports from China
List 4A (Effective September 1, 2019) & List 4B (Suspended Indefinitely)
USTR Notice to Suspend List 4B Tariff Indefinitely