The Latest on Tariffs

The Trump administration is moving quickly to raise tariffs on products coming from China. This includes lighting, ceiling fan and control products. 
 
This move comes after an announcement from United States Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, which informed reporters that the Chinese backpedaled on commitments last week during their negotiations.
 
The situation remains very fluid, but as of right now, the Trump administration has published two federal register notices on tariffs.
 
The first notice will increase the List 3 tariffs to 25 percent at 12:01 a.m., Friday, May 10 (tomorrow).You can view the FR notice here. It is important to note that in the Annex of the notice, the language specifies the two conditions for when the tariffs will increase.  Specifically, the notice states:
 
Effective with respect to goods (i) entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 10, 2019, and (ii) exported to the United States on or after May 10, 2019, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States is modified.
 
Take note of the “and” in the Annex language. In clarification with CBP, this means that the tariff will increase when goods are entered for consumption on or after 12:01 a.m. May 10 AND are exported on or after May 10. This means that goods currently on the water will not be subject to the tariff increase, since they were exported prior to May 10. This will be further clarified when CBP publishes its Cargo Systems Messaging Service message later today.
 
The second notice seeks to formally establish 25-percent tariffs on the additional $325 billion worth of Chinese products (List 4). List 4 will be subject to a comment process and a public hearing – similar to the previous lists.
 
The good news is that the negotiations with the Chinese are continuing in Washington, D.C., today and tomorrow, despite this week’s actions. Chinese Vice Premier Liu He is expected to participate in the negotiations.
 
Finally, last week, Ambassador Lighthizer indicated that USTR would be creating an exclusion process for the List 3 tariffs.  This was prior to the announcement that the tariffs would increase to 25 percent this week. It is unclear how this week’s actions will impact the development of the List 3 exclusion process.
 
We will continue to follow this situation closely and provide updates as new information becomes available.