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Apr 2018, Issue 11

How should Chinese enterprises deal with the impact of the China-US trade dispute?

On 4 April 2018, according to the result of Section 301 investigation, the US Trade Representative (USTR) announced a proposed list of China origin imports to be subject to an additional 25% tariff and sought public comment. This proposal covers an estimated import value of US$46 billion involving goods from industries, such as aerospace, information and communication technology, robot and machinery, etc. In response to the Section 301 investigation, the China’s Ministry of Commerce published the Announcement on Imposing Additional Tariff on Some Imported Goods Originating from the US (Announcement of Ministry of Commerce [2018] No.34, Announcement 34) planning to impose an additional tariff of 25% on US goods including agricultural products (e.g. beans), automobile, chemicals, aircraft, etc. The estimated import value covered by Announcement 34 is similar to that covered by the USTR’s proposed list of goods. Nevertheless, the effective date is yet to be announced.

Previously, in response to the US imposing tariff on steel and aluminium imports, the Tariff Committee of China’s State Council issued the Circular on Suspending Obligations to Offer Tariff Concessions to Some Imported US Goods (Shuiweihui [2018] No.13) to suspend the obligations to offer tariff concessions to 128 types of US goods, effective from 2 April.

With the continuous development of this China-US trade dispute, it is difficult to predict how this will eventually end up. Companies are suggested to pay attention to policy changes and focus on the validation of country of origin, tariff classification, supply chain adjustment, etc., to minimise the potential impact.

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