National Retail Federation CEO Matthew Shay downplayed the expected impact of the coronavirus epidemic on U.S. retailers, speaking on a Feb. 26 call with media about the group's 2020 forecast. NRF forecast that 2020 retail sales will grow by 3.5%-4.1% to more than $3.9 trillion, “despite uncertainty from the lingering trade war, coronavirus and the presidential election.” Citing conversations with retail executives, Shay said news about the retail supply chain is “generally encouraging,” with reports that some China plants are coming back on line and employees are returning to work, after closures due to the coronavirus outbreak. Warning the virus' impact needs to be taken seriously, Shay also said the disruption appears “less severe than originally expected.”
Section 301 Tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump Administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump Administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions—particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Almost three quarters of U.S. imports from China were subject to Section 301 tariffs, which ranged from 15% to 25%. The U.S. and China engaged in negotiations resulting in the “U.S.-China Phase One Trade Agreement”, signed in January 2020.
The Biden Administration took steps in 2021 to eliminate foreign policies subject to Section 301 investigations. The administration has extended and reinstated many of the tariffs enacted during the Trump administration but is conducting a review of all Section 301 actions against China.
International Trade Today is providing readers with some of the top stories for Feb. 18-21 in case they were missed.
Tracking devices that use the Global Positioning System should be classified differently from smartwatches and other Bluetooth-connected devices that rely on a smartphone connection, CBP said in two recently released rulings. The Sept. 30 rulings both involve Globalstar products that use GPS signals and provide location updates. Neville Petersen lawyer Michael Tomenga requested the rulings for Globalstar, and said the trackers should be classified based on the wireless transceivers, similar to fitness tracking devices (see 1603070028).
The Office of the U.S. Trade Representative issued a new product exclusion from the second group of Section 301 tariffs on goods from China. The new exclusion is reflected in "specially prepared product description," which covers "Skateboards with electric power for propulsion, of a power not exceeding 250 W (described in statistical reporting number 8711.60.0050)." The agency also converted a one exclusion for bulk silicone from a product description to an exclusion of a 10-digit HTSUS subheading, it said. The new exclusion applies from Aug. 23, 2018 and expires Oct. 1, 2020. The other change applies from when the original exclusion was announced, Oct. 2, 2019 and expires on Oct. 1, 2020, the agency said.
The Office of the U.S Trade Representative is set to publish a notice Feb. 20 listing some new product exclusions from Section 301 tariffs on the third list of products from China (see 2002190005). The product exclusions apply retroactively to Sept. 24, 2018, the date the tariffs on the third list took effect, and will remain in effect until Aug. 7, 2020.
The Office of the U.S. Trade Representative issued another set of product exclusions from the third group of Section 301 tariffs on goods from China. The new exclusions from the tariffs include "one 10-digit HTSUS subheading," which covers 6 requests, and "46 specially prepared product descriptions, which cover 61 exclusion requests," according to the notice. The product exclusions apply retroactively to Sept. 24, 2018, the date the third set of tariffs took effect. The exclusions will remain in effect until Aug. 7, 2020.
The Customs Rulings Online Search System (CROSS) was updated on Feb. 19. The following headquarters rulings not involving carriers were modified on Feb. 18, according to CBP:
The Canadian Parliament is moving the successor to NAFTA along, so that a March ratification vote is still looking likely, news from Canada says. While the U.S.-Mexico-Canada Agreement will be reviewed by the agriculture, natural resources and industry/science/technology committees, not just the trade committee, the other committees only have until Feb. 25 for that review, a report from ipolitics said.
The International Trade Commission recently issued two new revisions to the 2019 Harmonized Tariff Schedule. Changes include new and amended exclusions from Section 301 tariffs from China, as well as a decrease in tariffs for goods on list 4A. The ITC also implemented new Section 232 tariffs on some finished goods of steel and aluminum that took effect Feb. 8, as well as a shift to a quarterly tariff-rate quota for imports of large residential washers subject to Section 201 safeguard duties.
The proportion of smartphones imported from China dropped from almost 80% to just under 75% last year, according to government data, at the same time total imports fell 1.7%.