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  July 18th, 2018 | Written by

US China tariffs: a play by play

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  • Chinese exports are also subject to separate Section 232 tariffs on imports of steel and aluminum.
  • Tariff proponents say stronger trade enforcement against China will stop IP theft and unfair practices.
  • Tariff detractors say tariffs harm US firms more than Chinese firms.

On July 6, 2018, the US government began collecting 25 percent duties on $34 billion worth of imports from China, triggering an equivalent response from China. The tariffs are the first tangible outcome of the Trump Administration’s Section 301 investigation into China’s policies and practices on intellectual property (IP) and technology transfer.

In response to China’s retaliation, President Donald Trump has since ordered the United States Trade Representative to generate a list of Chinese imports worth an additional $200 billion to be subject to tariffs.

As noted in a recent report from the US-China Economic and Security Review Commission, on June 15, the Office of the US Trade Representative (USTR) published two lists of imports from China. List 1 products have already passed through a public comment period, while List 2 products, contain newly proposed tariff lines on which Section 301-related 25 percent tariffs will be imposed.

Together with exports from several other countries, Chinese exports are also subject to a separate set of tariffs stemming from Section 232 investigation into the impact on US national security from imports steel and aluminum, which went into effect on June 1. Tariffs on aluminum apply to all countries of origin except Australia and Argentina, while Argentina is covered by an absolute quota. The Congressional Research Service (CRS) estimated the total import value of steel products at issue at about $29 billion and aluminum products at issue at about $17 billion in 2017.

With regard to the Section 301 China tariffs, List 1 tariffs imposed on July 6 represents a revised product list culled from the original list of proposed tariff lines published on April 6 by the USTR. Compiled by several government agencies, the list identified imports that benefit from Chinese industrial policies as described by the USTR’s Section 301 investigation into China’s technology policies and practices. Of the original 1,333 tariff lines, 818 remain following public comment, during which 3,200 written submissions were received and 121 witnesses testified. These products’ import value is estimated between $32 and $34 billion.

Import data pulled by researchers at the Peterson Institute of International Economics (PIIE) show that about half of List 1 products’ 2017 US import value came from the top 36 products, including LEDs, airplane and printer parts, radio navigation aids, pumps, flat panel displays, and refrigeration equipment. Customs and Border Protection began to enforce the 25-percent tariff on List 1 product categories on July 6.

Section 301 List 2 tariffs are still in public comment period. List 2 represents a new product list covering 284 tariff lines (valued at an estimated $14 billion to 16 billion) compiled by the Interagency Section 301 Committee. About half of List 2 products’ 2017 US import value came from the top 11 products, including integrated circuits and semiconductor inputs. List 2 is subject to a public comment period and a hearing on July 24 before coming into force.

In written comments, proponents of the tariffs argue that stronger trade enforcement actions against China should help stop intellectual property theft and unfair practices. AFL-CIO trade policy specialist Celeste Drake described the tariffs as “a good start, if used strategically.”

Detractors expressed concern that tariffs harm US firms more than Chinese firms. Analysis by Brookings Institution senior fellow David Dollar and George Mason University senior fellow Zhi Wang found that more than half of China’s computer and electronic exports come from multinational firms operating in China, now paying duties on importing their own products. PIIE researchers Chad Bown, Euijin Jung, and Zhiyao Lu found that Section 301 tariffs will primarily impact capital goods (a 43-percent share of import value) and intermediate goods (52 percent share of import value), increasing supply-chain costs for US producers.