Updated September 17, 2018: The Trump Administration has set the implementation date of the latest rounds of 10% Tariffs as September 24, increasing to 25% on January 1, 2019.
A very good percentage of people who read this blog are importers from China who are selling into America.
Starting August 23, a new list of $16 billion in products were hit with duties. Will you be affected? What can you do? And what is the prognosis going forward?
The List of Products Affected By Trump’s Tariffs
Trump’s list of items to be tariffed has come in four stages. The first two affected roughly $50 billion of the United States’ $500 billion of imports from China. The third list, which goes into effect on September 24, affects $200 billion of goods. List 4 is not yet proposed but it seems an eventuality and would seemingly affect all remaining goods not hit by List 1, List 2, or List 3.
The first two lists have 25% tariffs while the third list has 10% tariffs from September 24, 2018 – December 31, 2018. After that, they go up to 25%. These tariffs are in addition to any existing tariffs (i.e. if your item currently has 10% tariffs, an additional 25% tariff would increase the overall rate to 35%).
Below is a complete list of all the products affected by Trump’s tariffs. These are lists of HS Codes. If you are an importer and do not keep accurate records of your HS codes now is the time to review your previous customs forms and figure out what these codes are for your products.
|List 1 – July 6, 2018 (25%) – $16 Billion (25%)||List 2 – August 23, 2018 – $23 Billion (25%)||List 3 – September 24,2018 – , $200 Billion (10%), Increasing to 25% on January 1, 2019||List 4, Not Proposed, All Other Products|
|Download the list of Affected Items for Round 1, July 6 (PDF)||Download the list of Affected Items for Round 2, August 23 (PDF)||Download the list of Potential Items for Round 3, Date TBD (PDF)||TBD|
Are You Affected by These Tariffs?
The first two lists largely targeted non-consumer products such as industrial products, medical products, transportation products, etc. In other words, there is a very good chance that the average Amazon seller was not affected by List 1 or List 2 of increased tariffs.
List 3 of products is much more consequential and starts to affect consumer goods – in other words, List 3 of products very well may affect you. This list, nor the date they will be implemented is not yet finalized but public consultations are ending this week and they will likely come into effect by the end of the year. The first thing you should do is review this list of HS codes and see if you are potentially affected.
List 4 has not yet been announced but it’s a fairly safe assumption that if negotiations do not go well with China, it is more a question of when than if. This list would seemingly affect all goods not hit by List 1, List 2, or List 3.
What You Can & Cannot Do About These Tariffs
There are some simple steps you can take to minimize the impact of these proposed tariffs on Chinese products.
What you should do:
- Review your products’ HS codes immediately and determine if they are affected by List 1, List 2, or List 3
- If you have any products impacted by List 3, try to get these shipped to you ASAP to avoid being hit
- Inventory plan for the possibility that the mid-term elections in November may cause a resolution to the trade dispute
What you shouldn’t do:
- Deliberately mis-classify your goods to avoid lower duties
The most important thing you can do is to determine if you will have any products impacted by the new duties. If you’re hit by List 1 or List 2, I’m sorry. You’re pretty much stuck with the new duties. The good news is that the United States has mid-term elections in November – if a deal is to be struck with China, it would be as good a bet as any to suspect a deal would be struck just before these elections so the Republicans can show to their voters a ‘win against China’. The bad news is that if a deal isn’t struck by November then there will be little political motivation for the Trump administration to strike a deal any time soon after.
In the very near future, List 3 will likely come into effect. You will likely have a month or two to prepare before this list is implemented. If you a shipment nearing completion, now is the time to encourage your supplier to get your goods shipped as soon as possible!
What you should not do is look at deliberately mis-classifying your items to avoid duties. What many people do not realize is that your shipments are not fully ‘liquidated’ until 12 months after clearance into the United States. This means that your shipments can be reviewed for up to 12 months after clearance to assess whether they have had the correct HS Code applied (you know that Bond you pay for when importing goods into the United States? This is to pay for your duties in the event you are re-assessed and can’t afford to pay up). You can be sure post-clearance audits of shipments will increase significantly in the future.
At the very least, every time a new round of duties is announced it is an extreme annoyance for importers. While consumers will ultimately pay the bill, in the short term it’s left to us importers who are paying the cost as we’ll be loathe to increase prices. Fortunately for importers, and unfortunately for consumers, in the long run prices will rise and consumers will be the real ones paying the cost. The good news is that like most trade disputes, this is one that will likely eventually be resolved, and hopefully quickly.