China Hits US Exports with $60b in Retaliatory Tariffs

Government Relations, Section 232, Trade and Tariffs

by the National Association of Manufacturers

Top Line: The Chinese government overnight responded directly to yesterday’s formal announcements from President Trump and USTR to impose 10 percent tariffs on $200 billion worth of Chinese imports (List 3), announcing plans to impose its own retaliatory tariffs on $60 billion worth of U.S. exports at either a 5 percent or a 10 percent rate, starting the same day – Monday, September 24.  No announcement has yet been made about the fate of U.S.-China trade negotiations originally proposed by the United States last week, though this week’s exchange of tariffs may make them less likely. NAM CEO Jay Timmons, meanwhile, has continued to stress the need to seize this moment to solve real problems facing manufacturers, stating that “[N]ow is the time for talks – not just tariffs – and manufacturers have laid out a blueprint to reset the U.S.-China commercial relationship that will result in ending China’s unfair and anti-competitive behavior.”

Detailed Analysis: In a formal statement, China’s Ministry of Commerce (MOFCOM) announced that China “had no choice” but to retaliate in response to U.S. moves, and that they had officially filed a complaint at the World Trade Organization against U.S. actions – a step they have taken for previously announced rounds of U.S. tariffs.  MOFCOM’s announcements were paired with a formal Ministry of Finance (MOF) notice announcing final tariffs of either 5 percent or 10 percent would apply to a list of $60 billion worth of U.S. exports that does not appear to have changed from the draft list proposed on August 3.  (As a review, that proposed list had included four groups of products that would fact tariffs at different rates ranging from 5 percent to 25 percent).

  • Tariff Rates: MOF’s notice announced rates of either 5 percent or 10 percent on 5,207 separate tariff lines, the same number of lines included in the earlier drafts:
    • A 10 percent rate would apply to products in Group 1 (2,493 tariff lines originally slated for a 25 percent tariff) and Group 2 (1,078 products originally slated for a 20 percent tariff)
    • A 5 percent rate would apply to products in Group 3 (974 products originally slated for a 10 percent tariff) and Group 4 (662 products originally slated for a 5 percent tariff)

Though the MOF notice did not clearly indicate that Chinese tariffs could increase on January 1, 2019 to match U.S. plans to increase its rates (from 10 percent to 25 percent on that date), a separate MOF release states that “if the United States insists on further increasing its tariff rate, the Chinese side will respond accordingly, with related matters released separately,” perhaps hinting that China would increase rates on these products back to the levels proposed in the August 3 draft.

  • Implementation Date: This round of Chinese retaliatory tariffs would be imposed starting at 12:01 a.m. on Monday, September 24 – slightly ahead of U.S. tariffs going into effect.
  • Scope of Products: The four lists cover a broad range of products, including agricultural products, material inputs (such as rubber, glass, and metals), as well as manufactured goods, with the largest concentrations of products in machinery (HTS codes starting with 84-85), chemicals (28-29), optical and measuring equipment (90), and iron and steel (72 and 73) and other notable concentrations in plastic (30), rubber (40), wood/paper products (44 and 48) and apparel products (61-62).  (The NAM has updated its combined Excel sheet that includes all of the products announced in this batch with their appropriate tariff rates, with numbered HTS codes; product descriptions are still in Chinese but the NAM is working to secure a translation.)  A fuller breakdown of items (summarized here at the 4-digit HTSUS level, though tariff items are listed down to the 8-digit level):
    • Live animals and animal products, including live animals (products included in 0101 and 0106), meat/seafood (0204, 0210 and 0305), and other animal products (0408-0410, 0504-0505, 0508 and 0511)
    • Vegetable products, including live trees and plants (0602-0604), vegetables and roots (0710 and 0714), fruit and nuts (0811 and 0814), coffee and tea (0901-0902, 0904, 0906 and 0909-0910), milling products (1101-1109), oil seeds (1202, 1204, 1206-1207 and 1210-1212), vegetable saps and resins (1301-1302), and other vegetable products (1401, 1404)
    • Fats and oils (1504, 1506-1509, 1512-1518 and 1520-1521)
    • Prepared foodstuffs, including meat products (1601-1602), sugars (1701-1702 and 1704), cocoa (1801 and 1803-1806), cereals, flours and starches (1901-1902 and 1904-1905), vegetables (2001-2009), other edibles (2101-2106), beverages and vinegar (2201-2209) and food industry residues (2301-2304, 2306 and 2309)
    • Mineral products, including salt, sulfur and other minerals (2501-2513, 2515-2526 and 2528-2530), ores (2601-2604, 2607-2608, 2613-2617, 2621), and mineral fuels/oils (2711)
    • Chemicals, including inorganic chemicals (2801-2837, 2839-2847, 2849-2850 and 2853), organic chemicals (2901-2942), pharmaceutical inputs (3005-3006), fertilizers (3101-3015), dyes and paints (3201-3215), essential oils and cosmetic preparations (3301-3307), soaps and waxes (3401-3407), glues and enzymes (3501-3507), explosives and combustibles (3601, 3603-3604 and 3606), photographic and cinematographic goods (3701-3707) and other chemicals (3801-3821 and 3823-3826)
    • Rubber/rubber articles, including plastics (3902-3909, 3911-3914 and 3916-3926) and rubber (4001-4003 and 4005-4017)
    • Hides, furs and leather and their products (4101-4104, 4106-4107, 4112-4115, 4201-4203, 4205, 4301-4304)
    • Wood/forestry products, including wood/wood articles (4401-4421), cork/cork articles (4501, 4503-4504), straw and wicker (4601-4602), wood pulp and scrap paper (4701-4706), paper/paperboard (4801-4812, 4814, 4816-4823) and printed materials (4901-4911)
    • Textiles, apparel, and wearable items, including silk (5007), wool and animal hair (5101, 5103, 5106-5109, 5111-5112), cotton (5203-5212), plant-based textile fibers (5306, 5309), man-made filaments and fibers (5401-5408, 5501-5504 and 5506-5516), felt, twine and non-wovens (5601-5609), carpets (5701-5705), special woven fabrics (5801-5804 and 5806-5811), coated or laminated fabrics (5901-5903 and 5905-5911), knitted fabrics (6001-6006), apparel (6101-6117 and 6201-6217), other textile/apparel articles and sets (6301-6308), footwear (6401-6406), hats/headgear (6501 and 6504-6507), umbrellas and walking sticks (6601-6603), and articles of feathers/birdskins (6701-6704)
    • Stone, cement, ceramic and glass products, including stone/plaster/cement (6802 and 6804-6815), brick/ceramic products (6901-6907, 6909-6914) and glass (7001-7011, 7013-7020)
    • Precious metals, stones, and pearls (7101-7118)
    • Metals and metal products, including iron and steel (7201-7203, 7205-7212, 7214-7229, 7301-7326), copper (7402-7403, 7405-7413, 7415, 7418-7419), nickel (7501-7502, 7504-7508), aluminum (7601, 7603-7616), lead (7801, 7804 and 7806), zinc (7901, 7903-7905, 7907), tin (8001, 8003, 8007), other base metals (8101-8112), metal tools and cutlery (8201-8215), and other metal articles (8301-8311)
    • Machinery and equipment, including machinery and mechanical appliances (8402-8410, 8412-8468, 8470-8484, 8487) well as electrical machinery and equipment (8501-8519, 8521-8523, 8525-8541, 8543-8548)
    • Vehicles and aircraft, including railway, locomotives and rolling stock (8602, 8604, 8607-8609), motor and other vehicles (8701-8702, 8705-8706, 8708, 8716) air/spacecraft (8801-8805) and boats and ships (8903, 8905-8907)
    • Optical and measuring equipment, including optical and medical equipment (9001-9008, 9010-9033), clocks and watches (9102-9107, 9109, 9112-9114), and musical instruments (9201-9202, 9205-9209)
    • Arms and ammunition (9303-9307)
    • Miscellaneous manufactured items, such as furniture, bedding and lamps (9401-9406), toys and games (9503-9507) and other miscellaneous items (9601-9620)
    • Works of art (9701-9706)