Canada-U.S. Blog

Trade Lawyers Cyndee Todgham Cherniak and Susan K. Ross

KORUS – Who Gets the Benefits?

Posted in Aerospace & Defence, Border Security, Corporate Counsel, Cross-border trade, Customs Law, Legal Developments, tariffs, Trade Agreeements, Trade Remedies

Published by the Journal of Commerce in September 2018.

While we are all understandably caught up in the trade war with China and wait to see whether additional tariffs will be imposed on more Chinese-made goods, the Korea – U.S. Free Trade Agreement revisions have been made public by the U.S. Trade Representative. Those changes include: extending the duty reduction on truck which now go to zero duty in 2041; Korea doubles to 50,000 the U.S.-made vehicles permitted per manufacturer per year; vehicle testing requirements are to be harmonized – U.S. testing accepted in Korea;  eco-credits or the CAFÉ standards are to be expanded by Korea; pharmaceutical reimbursements will become compliant regarding Korea’s Premium Pricing Policy for Global Innovative Drugs; and “long-standing” concerns about how Korea conducts origin verification audits will be addressed.

As a result, Korea became subject to product-specific quota levels regarding the 232/steel and aluminum tariffs.

Certainly, the auto industry is happy the market access door was opened a bit wider, but what more is there?  U.S. domestic industry which relies on antidumping and countervailing duty will be pleased by some attempts at greater transparency consisting of advance notice of in-person verifications; prior to initiation, the respondent is to be provided with a list of the topics to be addressed, including the types of supporting documentation required; any written report must describe the methods and procedures relied up and the results, and be made public; and the investigating authority must disclose to each party receiving an individual rate, an easily understood explanation about the calculations so the party may “easily” validate those calculations, including source references, and allow time for a response.

Undoubtedly the broadest benefit comes from attempts at greater transparency and certainty regarding verification audits.  KORUS Article 22.2.3 calls for the creation of a Joint Committee to oversee implementation of the agreement. That Joint Committee is now to establish a Rules of Origin Verification Working Group under the Committee on Trade in Goods to:

  1. Seek to resolve concerns arising from verification of origin claims;
  2. Develop further guidelines to address systemic concerns with verification practices and prevent such concerns from arising in the future;
  3. Monitor verifications taking “excessive” lengths of time or that do not seem to be reaching conclusion; and
  4. Present findings, reports and recommendations to the Committee on Trade in Goods as appropriate.

The attachment lists the relevant principles to follow:

  • Knowledge-based self-certification which allows the certificate of origin to be completed by the exporter or producer regardless of location or address; and permits minor errors or discrepancies (undefined) in the certification, questionnaire or other documents to be corrected without penalty and upon at least 5 working days’ notice;
  • Verifications are to be conducted through information requests to the importer, exporter or producer (not others);
  • Reaffirm that verifications will only be conducted where there is doubt as to the goods originating status and based on risk management principles that facilitate the movement of low risk goods;
  • Provide written advance rulings, in lieu of verbal advice;
  • Increase efforts to ensure that verification information requests clearly identify the specific goods being verified, are limited in scope to that necessary to determine the origin of the goods under review, and includes providing clear guidance to importers, exporters and producers regarding specific information required to prove origin; and
  • Endeavor to conclude verifications expeditiously, typically no later than 90 days after receiving the necessary information, and no later than 12 months from initiation, allowing for extensions in exceptional cases.

Article 15 of KORUS deals with electronic commerce. There were no changes to those provisions, even in the face of the festering di minimis issue perplexing U.S. authorities, and surely since the KORUS is more than 10 years old, those provisions could have used an update.  Given the rules of origin in KORUS are similar to those in other agreements, do international traders really think changes aren’t needed there, either? The closest we get to a change in those rules is an agreement by the U.S. to expeditiously process a request from Korea to treat certain products on the basis of a lack of commercial availability. In particular, that request is directed at yarn classified under 5108, 5403.39, 5504.10 and 5507.00, HTSUS. Perhaps most striking is the glaring omission of anything to do with trade in services, one of the fastest growing sectors of the U.S. economy.

When taken as a whole, there is not much there to talk about. The only other noteworthy provision is one whereby Korea agrees in 2018 to revise its Premium Pricing Policy for Global Innovative Drugs, meaning it will quit giving such obvious benefits to local drug companies when it comes to pricing their products versus those from foreign pharmaceutical companies.

While not meaning to undercut the advances the agreement does contain, was the outcome really worth the hoopla?

China 301 List 2 – Effective August 23, 2018 – in US and China

Posted in Border Security, Corporate Counsel, Countermeasures, Cross-border deals, Cross-border trade, Customs Law, Imports Restrictions, Legal Developments, tariffs, Transportation

USTR Lighthizer yesterday published notice that the 25% tariff on goods appearing on List 2 will become effective on August 23, 2018. For those who wonder if filing comments makes a difference, the answer is yes! In his announcement, USTR Lighthizer made the point the list dropped from 284 to 279 tariff items based on testimony and comments which had been received.  None of this, of course, helps those companies which are taking a serious financial hit from these tariffs, but then once the official notice is published in the Federal Register, an exclusion request will be included, and so companies should be gearing up to do two things:

  1. File exclusion requests for any products on Lists 1 and 2; and
  2. File comments for those products on List 3.

While those impacted hope for a quick resolution, prudence dictates planning for a List 4.   List 1 is discussed in the general press as worth $34 billion. List 2’s goods are worth $16 billion, and List 3’s good are worth $200 billion. Both President Trump and USTR Lighthizer have spoken of imposing additional tariffs on $500 billion worth of goods imported from China. If that happens, any product not on the other lists will end up on List 4.

It continues to be a significant challenge to predict how events will play out. Nonetheless, the Administration has repeatedly said the tariffs seek to change China’s behavior. The fact that China published a proposal on August 3, 2018 to impose its own retaliatory tariffs at 5%, 10%, 20% and 25% without an effective date certainly suggests the back and forth will continue.

The nature of the notice published by USTR also infers the tariffs will continue. The USTR made a point of stating: “Specifically, the Section 301 investigation revealed:

  • China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to require or pressure technology transfer from U.S. companies.
  • China deprives U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations.
  • China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets to generate large-scale technology transfer.
  • China conducts and supports cyber intrusions into U.S. commercial computer networks to gain unauthorized access to commercially valuable business information.”

It certainly seems this trade war will take a long time to resolve.  Do you know on which lists your products appear? Have you filed comments? Any exclusions requests? Which remedy applies to which of your goods? By what deadline must you file?  Have you consulted with your trade advisors to know which options are best for your business?

The latest USTR announcement can be found here: .

*** China has just announced its own revised List 2 on which an additional 25% tariff will be imposed on goods imported from the U.S. More details can be found here: – where both the announcement and the list of affected products were published. This is China’s version of a $16 billion list of products.

For the most current information, please feel free to visit the Tricks of the Trade page of MSK’s blog, which offers updates on these tariffs and other topics relating to international trade.

China 301 List 3 Products – New Schedule Published

Posted in Border Security, Countermeasures, Cross-border trade, Customs Law, Imports Restrictions, Legal Developments, Politics, tariffs, Trade Remedies

In the August 7, 2018 Federal Register, U.S. Trade Representative Lighthizer published the latest official timeline for those planning to participate in the China 301 List 3 proceedings. The relevant dates are:

August 13, 2018 – due date for filing requests to be a witness and a summary of expected testimony;

August 20-23, 2018 – public hearing dates;

September 6, 2018 – due date of submission of comments and post-hearing rebuttal comments – this deadline was previously announced as September 5, 2018.

For those planning to participate in this part of the 301 case, these are the dates by which to be governed.

China 301 List 3 Comments Deadline Changed

Posted in Border Security, Corporate Counsel, Cross-border deals, Cross-border trade, Customs Law, Trade Agreeements, Trade Remedies

There is a new publication which appeared on the USTR website on August 2, 2018. In it, USTR clarifies the August 17, 2018 deadline for comments regarding products on the China 301 List 3 has also been extended to September 5, 2018.

China 301 List 3 – 25% Duty ???

Posted in Aerospace & Defence, Border Security, Buy America, Corporate Counsel, Countermeasures, Customs Law, Imports Restrictions, Legal Developments, NAFTA, Trade Agreeements, Trade Remedies, World Trade Organization

On August 1, 2018, USTR Lighthizer issued a press release indicating he was following through with President Trump’s direction and will consider raising the rate of duty from 10% to 25% on those products on China 301 List 3. A formal notice in the Federal Register is expected soon.

Mr. Lighthizer also announced the written comment period is being extended to September 5, 2018, while the deadline to request to appear at the public hearing is changed to August 13, 2018. The hearing itself is still scheduled for August 20 to 23, 2018.

China 301 – List 3 Now A Reality

Posted in Aerospace & Defence, Border Security, Corporate Counsel, Cross-border deals, Cross-border trade, Customs Law, Export Controls & Economic Sanctions, Exports, Imports Restrictions, Legal Developments, NAFTA, Trade Agreeements, Trade Remedies

Late on July 10, 2018, U.S. Trade Representative Lighthizer released a list of the next Chinese-made products targeted for additional duties, this time at a 10% rate and worth about $200 billion.  The statement in support of this action can be found here: USTR Statement Supporting China 301 List 3; and the list of affected products here: China 301 List 3 Products. As before, the list of products is released in Federal Register pre-publication format.

The dates to keep in mind are as follows:

July 27, 2018:  Due date for filing requests to appear and a summary of expected testimony at the public hearing, and for filing pre-hearing submissions;

August 17, 2018:  Due date for submission of written comments;

August 20 – 23, 2018:   Public hearing;

August 30, 2018:  Due date for submission of post-hearing rebuttal comments.

This new List 3 bears Docket No. USTR-2018-0026.  If you are considering filing comments, keep in mind USTR wants to hear about “whether imposing increased duties on a particular product would be practicable or effective to obtain elimination of China’s acts, policies, and practices, and whether maintaining or imposing additional duties on a particular product would cause disproportionate economic harm to U.S. interests, including small- or medium-sized businesses and consumers.”

USTR has also published the form to be used by companies seeking exclusion from the China 301 List 1 tariffs, see China 301 Exclusion Request Form. At this point, the objection and reply forms have not been published. Companies considering seeking an exclusion will want to consider the same factors which have been material throughout these proceedings:

1) Can the product be sourced only in China;

2) If other sourcing is available, is there sufficient production;

3) Any exclusion request will have to be based on more than there being a price difference;

4) Is there a national security consideration; and

5) Any other pertinent factors.

China 301 Tariffs Took Effect – What Happens Next?

Posted in Aerospace & Defence, Agriculture, Border Security, Buy America, Corporate Counsel, Countermeasures, Cross-border deals, Cross-border trade, Customs Law, Exports, Legal Developments, tariffs, Trade Agreeements, Trade Remedies

The U.S. Trade Representative (“USTR”) issued a press release on July 6, 2018 in which the process companies can use to seek exclusion from the 25% tariff imposed on the same day on goods from China was announced. The timeline requires all original exclusion requests to be filed by October 9, 2018. Each will be reviewed to insure completeness and will then be posted for public review, and 14 days from the date of any posting, all objections are due. No more than 7 days later, any applicant may file its reply. All such submissions are filed through and must reference Docket No. USTR-2018-0025.

The first noticeable difference between the 301 and 232 product exclusion processes is the provision allowing replies. Another notable difference with the 301 exclusion process is trade associations are permitted to submit requests. As before, each request must relate to a specific product and provide the required supporting data and basis for the exclusion request. Details about what exactly is required can be found in the Federal Register notice referenced in the USTR press release. Another notable difference from the 232 process is that for any product where exclusion is granted, that exclusion applies to all imports of that product, not just those of the applicant. Further, all exclusions granted for the proscribed one year period will be retroactive to July 6, 2018, when the tariff was imposed.

Forms are recommended for the request, objection and reply, along with allowing more expansive information to be filed in the form of a public version of any filing and one filed with business proprietary information (“BPI”). Once the official Federal Register notice is published, the trade can expect those forms will be accessible from the portal.

Obviously, USTR learned from the 232 experience and is attempting to streamline the process, and cut the workload. Some of the 232 applications have been ruled upon and, right now, the only sense one gets is if your application was not subject to objection, it was granted. However, if an objection was filed, the application was denied. It will be interesting to see how much impact the ability to file a reply will have on the ultimate determination.

If you have not already done so, now is the time to engage in a few best practices when it comes to dealing with the 301 tariffs (and frankly any others which may be imposed).

  • Have you confirmed your product is properly classified?
  • If not, do so, and figure out where it should be classified and how that impacts the duty you have been paying. Should a prior disclosure be filed?
  • If you are on the 301 list, what options do you have for alternate sourcing? How long will it take for any foreign or U.S. suppliers to ramp up production to meet your needs and those of your competitors?
  • One of the steps which quickly became clear in the 232 context was any number of American companies who objected to an exclusion request by saying they could produce the product in question and claimed any past attempts to be a supplier to the applicant ended up in a disagreement over price. Quite often, that was a simple answer, and declining to use the American supplier had more to do with any number of objective factors such as quality, quantity, timing, and so on, not just the price.
  • Should you file for an exclusion? If so, can you distinguish your product from those of your competitors to a significant enough degree that the cost and effort you incur helps you the most, rather than your competitors?

While companies are dealing with implementation of the 25% tariff imposed on first round of Chinese-made goods, List 2 continues through the notice and comment process. That timeline is:

◄ 6-29-18 – Due date to request to appear and submit a summary of testimony and filing pre-hearing submissions.

◄ 7-20-18: Due date for written comments.

◄ 7-24-18: Public hearing

◄ 7-31-2018: Due date for submission of post-hearing rebuttal comments.

Where do you stand in being ready to deal with the 301 tariffs – those imposed and those threatened? Many medium and smaller sized companies are still trying to figure out how they will cope. Make sure to work with your trade compliance consultants to carefully balance the very real need for many to stay in business, with the practical need to stay compliant. Anecdotally, we are hearing about many suppliers who are offering options that do not really work. CBP continues to carefully monitor trade volumes, and any major shift in those patterns will be met with appropriate enforcement action. This is, of course, in the face of the continuing concern about transshipments. Finally, are you prepared for List 3? This would be the list that results from President Trump’s instruction to USTR Lighthizer to identify another $200 billion in Chinese goods on which to impose additional tariffs.

USTR Press Release:

Pre-publication Federal Register –

How does the Canada-US trade war affect cross-border shoppers?

Posted in Canada's Federal Government, Countermeasures, Customs Law, GST/HST, tariffs

On July 1, 2018, Canada imposed countermeasures (that is, 10% duties) on a number of U.S. origin goods.  These new duties will apply to goods that are purchased by Canadians who shop in the United States.  Canadian cross border shoppers may be asked more questions at the Canada Border Services Agency (“CBSA”) Primary Inspection Booth and may have to go to the Secondary Inspection Area to undergo a Secondary Examination or pay the cashier.  This will add time to a Canadian cross border shoppers return trip to Canada.

What U.S. Origin Goods Are Subject to a 10% Tariff?

Canadian cross border shoppers are likely to purchase groceries or consumer goods. We have prepared a handy cheat sheet (in alphabetical order) of the goods that Canadian cross border shoppers might buy in the United States.  The following goods (and potentially similar goods that are classified under the same H.S. code) will be subject to the 10% tariff:

Adhesives Aerated Water Aluminum Doors, Windows and Frames Aluminum Kitchen or Household Articles Aluminum Nails
Aluminum Scouring Pads Aluminum Screws Aluminum Staples Aluminum Tacks Aluminum Washers
Ball Point Pens BBQ Sauce Bedding Bobbins Bourbon
Broth Candles Candy – Chocolate Bars or Slabs (filled) Candy – Chocolate Bars or Slabs (not filled) Candy – Licorice
Cast Iron Grills Coffee – Roasted – not decaffeinated Comforters Confectionaries Cooking Chambers
Cucumbers Dishwashers Dishwasher Detergent Dryers Facial Cleansers
Facial Tissues Freezers Fungicides Gherkins Glue
Greeting Cards Face Cleaners Felt Tipped Pens Hair Lacquers Handkerchiefs
Herbicides Incense Inflatable Boats Insecticides Kitchenware
Laminated Wood Lawn Mowers Maple Sugar Maple Syrup Markers
Mattresses Mayonnaise Mineral Water Meat-Beef Meat-Spent Fowl
Mixed Condiments Mixed Seasonings Motor Boats Nail Polish Nail Polish Remover
Nail Decorations Nail Cuticle Creams Orange Juice (not frozen) Organic surface-active products and preparations for washing the skin Outboard Motor Boats
Ovens Paper Paperboard Pickles Pillows
Pizza Plastic bags and sacks Plastic household articles Plastic Hygienic
Plastic Toilet Articles
Playing Cards Pleasure Boats Plywood Plywood, consisting solely of sheets of wood (other than bamboo), each ply not exceeding 6 mm thickness; Other, with both outer plies of coniferous wood Postcards
Prepared Meals that contain Beef Prepared Meals that contain Chicken or Turkey Printed Cards Quiche Quilts
Ranges Razors Refrigerators Room Deodorizers Room Fresheners
Room Sprays Salad Dressing Sauces Seats with Wooden Frames Serviettes
Shaving Cream Shaving Lotion Sailboats Sleeping Bags Soap
Soya Sauce Spools Stoves Strawberry Jam Table Cloths
Tableware Tapers/Candles Tissue Paper Toilet Paper Tomato Ketchup
Tomato Sauces Upholstered Seats with a wooden frame Veneer Panels Washing Machines Water
Water – Flavoured Water – Sweetened Water Heaters Whiskey Yogurt


In addition, other aluminum goods are subject to a 10% tariff and steel products are subject to a 25% tariff.  The complete lists 1, 2 and 3 are posted by the Government of Canada.

Do Canadians have to pay the tariffs?

The answer is yes. Canadian consumers will have to pay the tariffs if they go shopping.  In a Canadian resident is outside Canada for less than 24 hours, they must report all goods purchased or acquired outside Canada and must pay all applicable duties and taxes.  There is no personal exemption limit (there used to be a limit of $50, but it has not been available for a while). So, if a Canadian resident buys $CDN 100 of U.S. origin chocolate, he/she should expect to pay tariffs of $10 and applicable GST/HST on $CDN 110 (the tariff included converted price).

A Canadian resident who is outside Canada for more than 24 hours and less than 48 hours cannot import alcohol under the personal exemption limit of $200.  This would mean the Canadian resident would have to pay duties of 10% on any whiskey or bourbon and all applicable GST/HST on the tariff included converted price.

If a Canadian resident who is outside Canada for more than 24 hours and less than 48 hours returns with more than $CDN worth of goods, full duties (including the countermeasures tariffs) and GST/HST/sales tax must be paid on all the goods.

Do Visitors to Canada have to pay the tariffs?

The answer is yes. A visitor to Canada must declare all goods that he/she importing that the visitor intends to consumer in Canada or leave in Canada (e.g., provide to a Canadian resident as a gift).  Gifts valued at $CDN 60 or less each may be brought into Canada duty free and tax free. Gifts worth more than $60 CDN are subject to duty on the excess amount. Alcoholic beverages, tobacco products and advertising materials do not qualify as gifts.


If a NEXUS Card holder fails to declare to the CBSA goods that are subject to the countermeasures tariffs, the CBSA may confiscate their NEXUS Card.

If you require more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at

Canada Retaliates

Posted in Aerospace & Defence, Antidumping, Border Security, Buy America, Corporate Counsel, Cross-border deals, Cross-border trade, Customs Law, Government Procurement, Imports Restrictions, Legal Developments, NAFTA

On June 29, 2018, Canada released its list of products on which retaliation will be taken against the 232 steel and aluminum tariffs imposed by the U.S. Table 1 products are subject to a 25% surcharge. While the products listed on Tables 2 and 3 are subject to a 10% surcharge. See Canada 232 Retaliation Lists for further details.

To Tariff or Not to Tariff – That Is The Question!

Posted in Aerospace & Defence, Agriculture, Border Security, Buy America, Controlled Goods Program, Corporate Counsel, Cross-border deals, Cross-border trade, Customs Law, Government Procurement, Legal Developments, NAFTA, Trade Agreeements, Trade Remedies

In the current tit for tat environment that overhangs international trade, below is an update regarding the 232 tariffs on steel and aluminum, the 301 tariffs related to China’s intellectual property rights and other business practices, and the 232 tariffs threatened on automobiles and parts.

Steel and Aluminum Tariffs:

As everyone by now knows, effective March 23, 2018, the U.S. imposed a 25% tariff on selected steel products and a 10% tariff on selected aluminum products.  The basis for this action was a finding by the Dept. of Commerce that foreign competition had essentially undermined U.S. steel and aluminum production capabilities and so triggered national security concerns.  In this context national security equates to economic security.  The shorthand reference in this context is 232, the section of the law -The Trade Expansion Act of 1962 – under which the Administration acted.

Customs and Border Protection clarified the affected products:

(1) “Aluminum” products are defined in the Harmonized Tariff Schedule (HTS) as: (a) unwrought aluminum (HTS 7601); (b) aluminum bars, rods, and profiles (HTS 7604); (c) aluminum wire (HTS 7605); (d) aluminum plates, sheets, strips, and foil (flat rolled products) (HTS 7606 and 7607); (e) aluminum tubes and pipes and tube and pipe fitting (HTS 7608 and 7609); and (f) aluminum castings and forgings (HTS 7616.99.51.60 and 7616.99.51.70), including any subsequent revisions to these HTS classifications.

(2)  “Steel” products are defined in the HTS as: (i) 7206.10 through 7216.50, (ii) 7216.99 through 7301.10, (iii) 7302.10, (iv) 7302.40 through 7302.90, and (v) 7304.10 through 7306.90, including any subsequent revisions to these HTS classifications.

Initially, certain traditional U.S. trading partners were exempted, but then not. South Korea reached agreement with the U.S. to revise the free trade agreement between the parties, and so as of May 1, 2018, the affected steel products from South Korea are subject to an agreed upon quota limit, but not the 25% steel tariffs.  The aluminum tariff remains in place.

Regarding steel and aluminum products from Argentina, Australia and Brazil, in the Presidential Proclamations Adjusting Imports of Steel and Aluminum issued on May 31, 2018, the successful conclusion of negotiations with these countries was announced and quotas imposed accordingly.

At the same time, our trading partners have been busy. Perhaps not surprisingly, China was the first to act. On March 29, 2018, it published a list of products on which retaliation would be taken against the U.S.’ 232 actions.  China’s World Trade Organization (“WTO”) complaint can be found here: China WTO Complaint, and lists the products on which retaliation was immediately imposed.

Next came India which filed at the WTO on May 18, 2018, see India WTO Complaint. The list of products on which retaliation is being taken was provided by way of a revision filed on June 13, 2018 and can be found here: India Product List. India first said retaliation would occur within 30 days and in the subsequent product list filing, the retaliation date was stated as May 18, 2018.

The European Union filed its own WTO complaint with a corresponding list of products on which retaliation would be taken, see EU WTO Complaint, starting on June 22, 2018.

The third country to file on May 18, 2018 was Russia. Its WTO complaint can be found here: Russia WTO Complaint, but no specific products are listed, only the promise that more details will follow.  In terms of when retaliation takes effect, Russia said within 30 days of its filing.

Turkey filed next on May 22, 2018, see Turkey WTO Complaint, and included its own list of products on which retaliation was to be applied effective June 21, 2018.

Japan also filed a WTO complaint on May 22, 2018, Japan WTO Complaint, which was supplemented on June 20, 2018, Japan WTO Supplement, but neither filing includes specifics about possible products.  Retaliation was to take effect within 30 days.

Finally, Norway has filed its own action to seek consultations with the US over the 232 tariffs, see Norway WTO Consultation Request. Consultations are the first step in the WTO process, and occur prior to filing a complaint. Many U.S. trading partners indicated they have been rebuffed when attempting consultations, so odds are that Norway’s complaint will soon be filed.

As to our NAFTA partners, Canada published a list of products on which retaliation will be imposed effective July 1, 2017.  That list can be found here: Canada 232 Retaliation Lists with Table 1 products subject to a 25% surcharge. While the products listed on Tables 2 and 3 are subject to a 10% surcharge. Mexico published its own list of products on which retaliation is taken effective June 5, 2018: Mexico Retaliation Notice.

China and 301:

In much the same way 232 laid the foundation for the U.S. to impose the steel and aluminum tariffs, 301 is another provision of another trade act which permits corrective action against U.S. trading partners, this time under the Trade Act of 1974. In this context, the culprit is China and its practices regarding intellectual property rights and other business actions, as has been widely reported.

Based on Congressional mandate, the U.S. Trade Representative (“USTR”) conducts regular reviews of the state of intellectual property rights throughout the world, and, in the past, typically found China’s practices to be troublesome and nothing more, but the Trump Administration changed policy and decided that punitive tariffs were in order.  The imposition of a 25% tariff on selected Chinese goods was announced on June 15, 2018.  This action followed the publication by USTR in early April on which retaliation was proposed.  The end result is that two lists were published in June when the final decision was announced.  The press release itself can be found here: USTR Press Release re China 301 Tariffs.  List 1 is published here: USTR China List 1, and List 2 here: USTR China List 2.  For products found on List 1, the 25% tariff takes effect on July 6, 2018.  For the products on List 2, since they are different from those originally mentioned, they will undergo notice and comment.  The relevant dates are as follows:

◄     June 29, 2018: Due date for filing requests to appear and a summary of expected testimony at the public hearing and for filing pre-hearing submissions.

◄     July 20, 2018: Due date for submission of written comments.

◄     July 24, 2018: The Section 301 Committee will convene a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW Washington, DC 20436 beginning at 9:30 a.m.

◄     July 31, 2018: Due date for submission of post-hearing rebuttal comments.

If your products are on List 2, now is the time to submit comment about why your products are unique, cannot be found in the U.S. or cannot be found at a reasonable cost or in adequate quantities in the U.S.

Not surprisingly, almost immediately, China announced it would retaliate, see China 301 Retaliation Notice.  Schedule 1 can be found here – China 301 Retaliation Schedule 1  and, effective July 6, 2018, China’s 25% tariff takes effect.  Schedule 2 consists of products on which official action is intended but not yet taken, see China 301 Retaliation Schedule 2.

In response, on June 18, 2018, President Trump announced he directed USTR to identify $200 billion worth of Chinese goods which are to be subject to an additional 10% tariff.  See Trade With China Statement. The general consensus is the amount of trade with China does not present $200 billion in additional products on which to impose tariffs. So, how this will be implemented by the U.S. remains unclear.  Similarly, the expectation is China will find ways in addition to increased tariffs to make life difficult for American companies, such as delaying visas for business travelers,  increasing inspections of and delaying goods arriving at the borders, slowing down the granting of permits and licenses, raising new and different objections to new businesses where Americans are owners, enhancing its protective measures over key/sensitive industries, and other more subtle means to make it difficult/impossible for Americans to do business in China.

232 & Automobiles/Parts:

The third category of additional tariffs is expected to come from this review which was announced on May 23, 2018. Like the steel and aluminum tariff action, the auto and auto parts action is framed in the context of the decline in the production of autos and auto parts equates to a threat to U.S. economic security, and so national security.  The public hearing is scheduled to be held on July 19 and 20, 2018. It is expected that once the process is completed, the findings will support imposition of additional tariffs on these products, too.

The European Union 232 steel and aluminum retaliatory tariffs just took effect. Immediately President Trump took to Twitter, continued his attacks on the EU’s trading framework, and mentioned a 20% tariff to be imposed by the U.S. on European-made vehicles.   Is there really any doubt as to how the auto and auto parts 232 investigation will come out?   President Trump went on to say that European automakers should build their cars in the U.S., see Tweet re EU Tariffs. Perhaps someone in the Administration could point out many of the European auto makers already build many of their models in the U.S.  Interestingly, so do many of the Japanese auto makers. Are they next?  The only group that seems to be safe is the Korean auto makers, and then only because renegotiations regarding the Korea-U.S. Free Trade Agreement were recently concluded.