January 28, 2020
On Jan. 15, China and the U.S. signed the Phase One trade deal that left the 25 percent Section 301 tariffs on Lists 1, 2 and 3 untouched. These are the tariffs that most substantially impact NAFEM members. The deal, which becomes effective Feb. 14, did reduce tariffs on List 4A from 15 percent to 7.5 percent. List 4A tariffs primarily impact the smallwares side of the industry. The new agreement also postponed the planned Dec. 15 List 4B tariffs, which largely affect consumer electronics and apparel. More information is available in the Federal Register notice and this fact sheet from the United States Trade Representative (USTR).
In return for modest tariff reductions, China agreed to reforms addressing intellectual property and technology, agriculture, financial services, and currency and foreign exchange. It also committed to increase purchases of U.S. goods and services and establish a process to quickly resolve trade disputes. President Trump indicated that further negotiations may be on hold until after the 2020 U.S. election.
China and the U.S. also agreed to resume semiannual talks held with previous administrations that the Trump administration had canceled, according to the Wall Street Journal. These talks historically addressed economic and trade issues but were not trade negotiations.
The portal for submitting exclusion requests for items on List 4A subject to 7.5-percent tariffs closes Jan. 31. Currently, there is no automatic renewal for Section 301 tariffs. Companies must reapply for product exclusions each year. However, according to Christine Sohar Henter, NAFEM legal counsel, Barnes & Thornburg, conversations in Washington, D.C. indicate this approach may change.
It is important that NAFEM members continue to voice their opposition to the tariffs with elected officials. Here is a complete list of Congressional Representatives and their contact information. NAFEM continues to closely monitor this situation.