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American ShipperTrade and Compliance

Exclusions for $200 billion in China tariffs on hold

U.S. Trade Representative Robert Lighthizer indicated in a letter that ongoing trade talks will play a role in whether the Trump administration eventually will establish an exclusion process.

   U.S. Trade Representative Robert Lighthizer indicated in a Friday letter to Sen. Tim Kaine, D-Va., that the Trump administration is holding off on initiating a process for exclusions from a $200 billion tranche of Section 301 tariffs on goods from China, as talks to defuse trade tensions between the U.S. and China remain ongoing.
   Lighthizer noted that President Donald Trump agreed to delay until March 2 an increase in the duty rate covering $200 billion worth of goods from China in 2017 import value from 10 percent to 25 percent, after that increase had been set to take effect on Jan. 1.
   “If the duty rate on the $200 billion tariff action is raised to 25 percent, USTR will initiate an appropriate exclusion process,” Lighthizer said.
   The letter responded to an Oct. 18 letter led by Kaine and signed by 10 other Democrat senators urging Lighthizer to establish an exclusion process for the $200 billion tranche, with the tariffs at that point set to increase on Jan. 1.
   Trump and Chinese President Xi Jinping on Dec. 1 agreed to hold off on imposing further tariffs for 90 days as their governments engage in talks to promote more harmonious trade relations.
   USTR has granted nearly 1,000 requests for exclusions from a first tranche of tariffs that took
effect July 6 covering $34 billion worth of goods from China in 2017
import value, but has not announced any granted exclusions for a second tranche of tariffs across $16 billion worth of goods from China in 2017 import value. More than 2,500 exclusion requests have been submitted for goods included in the $16 billion tranche.
   The U.S. is engaging China to address structural economic issues, such as forced technology transfer, intellectual property theft and “other actions impeding American economic growth and innovation,” Lighthizer’s letter states.
   Lighthizer also indicated that USTR doesn’t intend to exempt U.S. importers who use foreign-trade zones (FTZs) from additional duties on goods from China when those duties apply to all other U.S. importers.
   “Understandably, every importer, including importers who make use of FTZs, would prefer a special exemption from the additional tariffs,” Lighthizer wrote. “As of this time, we have not found a basis for exempting U.S. importers who use FTZs from the additional duties, when those duties apply to all other U.S. importers.”
   He added, “We will continue to talk with our Chinese counterparts in hopes of resolving unfair trade practices on the part of the government of China.”
   The Trump administration will host a Chinese delegation led by Chinese Vice Premier Liu He in Washington later this month for further trade talks.

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Brian Bradley

Based in Washington, D.C., Brian covers international trade policy for American Shipper and FreightWaves. In the past, he covered nuclear defense, environmental cleanup, crime, sports, and trade at various industry and local publications.
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