How to Prepare for Proposed China Tariffs

At the stroke of midnight July 6, 2018, tariffs against imports of tens of billions in yearly value of Chinese goods took effect for goods entered into or withdrawn from warehouses for consumption.

Here’s what you should know:

  • The 25-percent duties are based on country of origin, not country of export, and apply only to Chinese products.
  • Sectors subject to the proposed tariffs include aerospace, information and communication technology, robotics, and machinery.
  • There are two lists of affected products: one goes into effect on July 6, and another that potentially goes into effect later in summer 2018.

  • The first list includes 818 tariff lines valued at $34 billion worth of imports from China. You’ll find the list here:
  • The Office of the U.S. Trade Representative (USTR) recommends a second list, adding 284 product lines to the Section 301 tariffs that cover approximately $16 billion in Chinese imports. This list will now undergo further review through a public notice and comment process, and another hearing. You’ll find the second list here:
  • Any of the 818 products on the list of tariffs published by the USTR that are admitted into a U.S. foreign trade zone (FTZ) on or after midnight July 6 may be admitted only as "privileged foreign status," except for products eligible for admission under "domestic status," which are subject to the Section 301 duties. Both "privileged foreign status" and "domestic status" FTZ admissions will be subject to any Section 301 duties upon entry for consumption.

    Understanding Tariff Impacts

  1. Run an ACE report of your imports and identify items by Harmonized Tariff Schedule number and Chinese country of origin. Calculate the additional 25-percent tariff expense using the imported value of these goods, and provide to upper management for further action.
  2. Work with purchasing to determine if they procure any of these items domestically. These items will become much more expensive from your supplier due to the tariffs, and you should consider other sourcing options.
  3. All importers of items on the second list proposed for Section 301 tariffs should consider providing comments to USTR. The effort appears to pay off: After considering comments in its initial review, the USTR removed 515 tariff subheadings from the original list of 1,333 proposed items. Submit comments here: For more information about the hearings and request for public comment:
  4. If your company uses FTZs for manufacturing, consider commenting to the USTR on the unfair treatment of tariffs applied to "non-privileged" parts and materials. Currently, removal from the zone of Section 301 items must be reported at "the highest value foreign component country of origin" on entry documentation. This means the value of non-privileged foreign status parts and materials legally admitted to an FTZ for manufacture into a different finished product will be assessed the additional tariff, even when substantial transformation takes place to create a U.S.-origin good.
  5. Consider utilizing duty drawback. Importers can get a 99-percent refund of duties paid on imported Section 301 items that are subsequently exported or assembled into a finished good, then exported. If this program did not have a benefit in the past for your company, it may now.