China Retaliatory Tariffs

As expected, China has announced an increase in its retaliatory tariffs on $60 billion in US-origin products. The move is in response to the US announcement regarding the increase of the tariff rate applicable to $200 billion in Chinese-origin products that took effect on May 10, 2019. The products subject to the China’s retaliatory measures fall on four lists, originally published on August 3, 2018, that were separated according to proposed tariff rates of 25%, 20%, 10% and 5% (see lists below). Those products have been subject to reduced tariff rates of 10% and 5%, but the originally proposed tariff rates will take effect with respect to US-origin product entered into China on or after June 1, 2019. Tariff exclusions for certain auto parts on the 5% list will, for the time being, continue to apply in accordance with announcements published in January and March of this year.

As a significant development, China has also unveiled a formal product exclusion process whereby Chinese importers, Chinese designated parties of US manufacturers, and relevant chambers of commerce and industry organizations may file requests with the China Ministry of Finance to exclude products from the retaliatory tariffs. In deciding whether to grant a product exclusion request, the Ministry of Finance will consider factors such as: (i) the availability of substitute products; (ii) the economic hardship caused on the applicant; (iii) the adverse impact of the tariffs on related industries; and (iv) the related societal impact of the tariffs. An excluded product will be exempt from the retaliatory tariffs for one year from the effective date of the exclusion, and the previously levied retaliatory tariffs may be refunded if the exclusion applies to all the products under a tariff line or a refund is otherwise considered feasible by customs.

If you would like to explore the new exclusion process, or have any questions about China’s retaliatory tariffs, please let us know or reach out to Jon Cowley (Hong Kong) at Jon.Cowley@bakermckenzie.com and Frank Pan (Shanghai) at Frank.Pan@bakermckenzie.com.

China Retaliatory Tariff Lists

US products to be subject to 25% tariff, increased from the current 10% tariff:

http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201905/P020190513719203602248.pdf

US products to be subject to 20% tariff, increased from the current 10% tariff:

http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201905/P020190513719204287788.pdf

US products to be subject to 10% tariff, increased from the current 5% tariff:

http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201905/P020190513719204715521.pdf

US products to remain subject to 5% tariff:

http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201905/P020190513719205123756.pdf

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