Trump Grants Tariff Exemptions on Hundreds of Chinese Products

Meanwhile, China's Ministry of Finance announced the exemption of 16 US product lines from tariffs

Image Credits: VCG / Contributor / Getty.

The Trump administration granted temporary exemptions to hundreds of Chinese products imposed last year, according to Politico, citing three notices published in the Federal Register on Friday. Among the ‘unbanned’ products are plastic straws, printed circuit boards and Christmas tree lights, to name a few.

It is unclear how large a portion of last year’s $250 billion tariff package the exemptions constitute, however the move stems from over 1,100 exclusion requests by US companies and other domestic entities, according to the documents.

Other products on the list include: “certain single-speed bikes, water drinking fountains for pets, various types of pumps, heat exchangers, compressors, chest-type coolers, upright freezers, household water filter cartridges, anesthesia masks, electric-powered skateboards, three-wheeled carriages used by people with disabilities, chain-link fence panels, tractor-trailer skirts, x-ray tables, wick-burning torches for outdoor use, and dog harnesses and dog leashes.”

As CNBC notes, the exemptions cover a total of 437 types of products.

The U.S. Chamber of Commerce in partnership with RSM US LLP, an audit and tax consulting firm, released a quarterly survey report on Thursday showing that 40 percent of midsize company leaders say Trump’s tariffs on imported goods are posing challenges for their business. Twenty-six percent also reported being hurt by retaliatory tariffs that China and other countries have imposed in response to Trump’s duties over the last two years. –Politico

“Rising tariffs and policy uncertainty are preventing midsize businesses — who employ millions of Americans — from investing and growing,” said US Chamber of Commerce executive vice president and chief policy officer, Niel Bradley.

“To guard against a possible recession, policymakers need to restore economic certainty, and that means deescalating trade tensions with China, passing [the U.S.-Mexico-Canada Agreement] and investing in the future through an infrastructure package,” he added.

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Several factors were considered in determining exclusion requests, including whether the particular product – or an acceptable substitute – is only available from China, whether additional duties imposed on the product would cause severe economic harm to the applicant or to other US interests, and whether the US considers the product strategically important or linked to Beijing’s “Made in China 2025” industrial program, or ones like it.

Trump initially imposed duties on $50 billion worth of Chinese goods that he said benefited from Chinese government support under the “Made in China 2025” initiative. But when Beijing retaliated, Trump expanded his action to include products outside his original target zone.

By the end of the year, Trump will have imposed either a 30 percent or a 15 percent duty on as much as $550 billion worth of Chinese goods as a result of tariff hikes set to take effect in October and December. –Politico

According to CNBC, exempted products covered by Friday’s USTR notices will fall into three batches based on when duties took effect in 2018.

  • One set based on the Sept. 24, 2018, implementation of tariffs on $200 billion worth of goods. This exemption will expire on Aug. 7, 2020.
  • Another based on the Aug. 23, 2018, implementation of tariffs on $16 billion worth of goods. This exemption will expire one year from the publication of the notice, at this time next year.
  • The other set of exclusions is based on tariffs on $34 billion worth of goods that took effect July 6, 2018. This exemption will also expire this time next year.

The exemptions will be in force for one year for the $34 billion and $16 billion product lists, and until Aug. 7, 2020 for the $200 billion product list.

Meanwhile, China’s Ministry of Finance announced the exemption of 16 US product lines from tariffs, after which President Trump said he would delay tariff increases on $250 billion worth of Chinese goods by two weeks until October 15.

“This doesn’t seem to be an immediate shift in US trade policy, as the US had previously offered some type of tariff exemptions to qualified US goods,” according to Nick Marro, global trade lead at The Economist Intelligence Unit, who made the comments in an email to CNBC, adding “It’s more in consideration of the trade war impact on the domestic US economy than a concession to China, but this could still help build some goodwill before the trade talks in October.”

The Trump administration has put Chinese telecommunications giant Huawei on a blacklist that effectively prevents U.S. suppliers from selling to the firm. Beijing, for its part, has threatened the announcement of its own “unreliable entities list.”

The Trump administration initially focused on reducing the large U.S. trade deficit with China, but the disagreement has expanded to U.S. companies’ complaints about limited access to the domestic Chinese market and being forced to hand over proprietary technology to China. –CNBC

We’re guessing plastic drinking straws were one of the first items under consideration.

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