Imports at major U.S. retail container ports reached “unusually high numbers” just before the new 15 percent Section 301 tariffs on List 4A Chinese goods took effect Sept. 1, the National Retail Federation said Sept. 10. Imports “are expected to surge again” before the List 4B tariffs take effect Dec. 15, it said. “Retailers are still trying to minimize the impact of the trade war on consumers by bringing in as much merchandise as they can before each new round of tariffs takes effect and drives up prices." U.S. ports handled 1.96 million 20-foot-long cargo containers or their equivalents in July, the latest month for which actual numbers are available, NRF said. That was up 9.1 percent sequentially from June and represented a 2.9 percent increase from July 2018, it said. “Likely driven by the new tariffs” scheduled to take effect Dec. 15, NRF forecasts November imports will reach 1.97 million containers, the highest monthly total since shipments topped 2 million last October, it said.
Section 301 (too broad)
The fourth list of Section 301 tariffs that was split into two subgroups, 4A and 4B, includes many very similar items that will require some specificity for differentiating between them, the Atlanta International Forwarders and Brokers Association said in a blog post. Fifteen percent tariffs on the 4A group of products took effect on Sept. 1, while the 15 percent tariffs on the 4B items start on Dec. 15. The differing effective dates are hoped to reduce the holiday season impacts (see 1908130033).
Samsung’s Galaxy Tab S6, released for sale on Sept. 6 and marked on the packaging as a product of Vietnam, typifies the growing volume of Vietnamese-sourced tablets and laptops imported to the U.S. under Harmonized Tariff Schedule subheading 8471.30.01. Though the overwhelming majority of those goods continue to originate from China, Vietnam is emerging as a more important country of origin, according to Census Bureau trade data accessed through the International Trade Commission’s DataWeb tool.
Wendy Cutler, former acting deputy U.S. trade representative, says that the first bucket of Section 301 tariffs, the ones tailored to Made in China 2025, worked. Even though Cutler is generally not a fan of tariffs, she said, "I think those succeeded … in getting China to negotiate in earnest."
Walmart Chief Merchandising Officer Steve Bratspies was “really proud” how his team mitigated the cost impact of the Lists 1, 2 and 3 Section 301 tariffs on Chinese goods, he told a Barclays investor conference Sept. 4. List 4, which covers virtually all China-sourced goods not previously tariffed, “makes it tougher” to manage, Bratspies said. “There's no doubt about that.” With the previous three tariff rounds, “there were a few prices” that Walmart did have to raise, “but we didn't see any change in our unit projection of where we thought it would be, so that was absorbed,” he said. “We were very focused and targeted on how we did it. We didn't let any of our price gaps slip, and we maintained price leadership.” Though List 4 “gets tougher,” Walmart plans “the same approach that we took to List 3, which is we literally go through item by item,” Bratspies said. “That's what our buyers do.” There's “a whole bunch of different levers that a buyer can pull to understand how to manage that,” he said. The goal is to “offset as much as we possibly can either through negotiation or managing mix,” he said. Even if Walmart needs to raise prices as a “last resort” to maintain margins where they need to be, “we're going to run the Walmart model, which is we want to lead on price,” he said. Walmart last month slightly scaled back full-year expectations on consolidated net sales growth, factoring in the impact of the List 4 tariffs when they were still at 10 percent (see 1908150049).
The International Trade Commission recently released Revision 12 to the 2019 Harmonized Tariff Schedule. Changes in the latest version relate entirely to the imposition of 15 percent Section 301 tariffs on products from China, effective Sept. 1. New U.S. Note 20(r) and U.S. Note 20(s) are added to subchapter III of chapter 99 describing the applicable tariff treatment and HTS subheadings covered by the new tariffs, respectively. New subheading 9903.88.15 is added for goods subject to the new List 4 tariffs.
International Trade Today is providing readers with some of the top stories for Aug. 26-30 in case they were missed.
As the 15 percent List 4A Section 301 tariffs took effect Sunday on $52 billion worth of TVs, Bluetooth headphones, smartwatches and other China-sourced consumer tech goods, the Consumer Technology Association marked the development by renewing its call for congressional legislation to rein in presidential authority to wage tariff actions. The U.S. president “does not have unilateral authority on trade,” CTA CEO Gary Shapiro said.
CBP created Harmonized System Update (HSU) 1915 on Sept. 3, containing 64 Automated Broker Interface records and 12 Harmonized Tariff Schedule records, it said in a CSMS message. The update includes adjustments required by the fourth tranche Section 301 tariffs. Modifications required by the verification of the 2019 HTS and to support Partner Government Agency message set functionality are included as well.
The U.S. trade representative is telling the World Trade Organization that the case China brought against the U.S. for Section 301 tariffs should be dropped. "China’s decision to launch this dispute is hypocritical. China is currently retaliating against the United States by imposing duties on most U.S. exports -- over $100 billion of trade. China cannot legitimately challenge measures at issue for being 'unilateral' and WTO-inconsistent, while at the same time openly adopting its own unilateral tariff measures in connection with the very same matter."