The United States has announced new tariffs on imports from China, and companies importing from China need to take action. This decision follows a comprehensive four-year review conducted under Section 301 of the Trade Act of 1974, and will increase the “China 301 duties” that have increased costs for many importers bringing product in from China. The Biden administration has made it clear that it is serious about enforcing these measures, which are designed to protect American technological innovation and competitiveness.
List of New Tariffs on Imports from China and Implementation Date
The new tariffs target a broad spectrum of products. The specific tariff rates and a comprehensive list of affected products can be found in the official memorandum released by the White House here, and a summary from the announcement of the items that are impacted is below:
- Battery parts (non-lithium-ion batteries): Increase rate to 25 percent in 2024;
- Electric vehicles: Increase rate to 100 percent in 2024;
- Lithium-ion electrical vehicle batteries: Increase rate to 25 percent in 2024;
- Lithium-ion non-electrical vehicle batteries: Increase rate to 25 percent in 2026;
- Natural graphite: Increase rate to 25 percent in 2026;
- Other critical minerals: Increase rate to 25 percent in 2024;
- Permanent magnets: Increase rate to 25 percent in 2026;
- Semiconductors: Increase rate to 50 percent in 2025;
- Ship to shore cranes: Increase rate to 25 percent in 2024;
- Solar cells (whether or not assembled into modules): Increase rate to 50 percent in 2024; and
- Steel and aluminum products: Increase rate to 25 percent in 2024.
A full list of items subject to duty increases, which can be downloaded here.
Expect Increased Enforcement
The U.S. Trade Representative (USTR) has underscored the importance of stringent enforcement of these new tariffs on imports from China. The official report, which details the findings of the four-year review, is available here. Key recommendations from the report include:
- Enhanced Monitoring and Compliance: USTR recommends increasing monitoring efforts to ensure compliance with the new tariff regulations. This includes regular audits and inspections of imported goods to verify their origin and correct classification. This means that importers can expect more scrutiny of goods they are importing from the USA.
- Strengthening Legal Frameworks: Proposals to strengthen the legal frameworks around intellectual property protection and enforcement. This includes collaboration with other international trade partners to address global IP theft and technology transfer issues. A long-standing concern of companies manufacturing and selling products in China, additional efforts to improve intellectual property protection are supported by the business community.
- Support for Domestic Industries: Recommendations to provide support and incentives for domestic industries that are affected by Chinese trade practices. This could involve financial aid, training programs, and initiatives to boost domestic production capabilities. Companies that are manufacturing in the USA may have opportunities to receive more government support.
Impact of new Tariffs on Importers, Retailers, and E-Commerce Sellers
Companies importing from China should take this announcement seriously, regardless if their products are directly affected. The imposition of these new tariffs will have a significant impact on importers and e-commerce sellers. Businesses importing goods from China will need to ensure strict compliance with the new regulations, particularly in the accurate classification of products under the Harmonized Tariff Schedule of the United States (HTSUS).
Recommended Action for Companies Admist the Increased Enforcement
The impact of new tariffs on imports from China is broad, and anyone purchasing products from overseas should review their practices to ensure compliance. With increased enforcement ahead, now is the time for importers to review and understand where they stand. We recommend:
- Review and Update HTSUS Codes: Importers must carefully review their products’ HTSUS codes to ensure they are accurate and up-to-date. Misclassification can lead to significant penalties and delays in customs clearance. See our article on the importance of using the correct HTSUS codes. If you find that you are using an incorrect HTSUS, make sure to take the appropriate steps to change to the correct code, such as submitting a prior disclosure document to US Customs and Border Protection, and seeking legal counsel as necessary. If you feel strongly that you fall into a specific HTSUS, we recommend submitting a request for a custom ruling.
- Review Country of Origin Claims: The China 301 duties apply to products made in China. Enforcement efforts are focused on skirting China 301 duties, which can sometimes be done through false country of origin claims. Make sure to review and validate all country-of-origin documentation (a guide from the International Chamber of Commerce on validating country-of-origin certificates can be found here)
- Adjust Pricing Strategies and Review Costs: With increased tariffs impacting costs, businesses may need to adjust their pricing strategies to maintain profitability. This could involve negotiating with suppliers, finding alternative sourcing options, or passing on some of the costs to consumers. We recommend using landed cost calculators to accurately review your costs to identify all cost-saving opportunities and to adjust as necessary.
- Diversify Geographically: Diversification geographically of a supply chain, simply moving supply to another country, can reduce costs. This includes exploring alternative suppliers and logistics solutions to mitigate the impact of the tariffs. When making this shift, extra due diligence is required to confirm the country of origin.
Now is the time for businesses to act. By proactively making necessary adjustments and ensuring compliance with the new tariff regulations, importers and e-commerce sellers can navigate these changes more effectively and maintain their competitive edge in the market.
For more detailed information, refer to the official White House memorandum and the USTR’s final report.