NEWS

I. President Trump Announces Retaliatory Duties on Potentially $60 Billion of Chinese Imports Due to IP Theft; Duties Reportedly Delayed for 60 Days for Public Comment

II. Steel/Aluminum Duty Surcharges for National Security Reasons to Exempt: Canada, Mexico, Korea, Europe, Australia, Argentina and Brazil

This Client Alert summarizes two topics: (I) Retaliatory duties on Chinese imports announced today under “Section 301” of the Trade Act of 1974 and (II) News on the countries initially exempted from the Steel and Aluminum national security-related duties announced March 8, 2018.

I. Additional Duties on Chinese Imports For Infringement of U.S. Intellectual Property Rights

On Friday, March 23, 2018, the President announced retaliatory import duties resulting from a report issued by the Office of the U.S. Trade Representative in the ongoing Section 301 investigation into complaints that China is promoting the infringement of U.S. intellectual property rights:

• Duties possibly covering over 1000 HTS Codes
• Additional duty surcharges of between 25% and 100%
• 60-day deferral of duties according to press reports
• A Retaliation List will be released soon for public comment

Two documents were released:
• White House Press Release on New Section 301 Actions
• Section 301 Report

The proposed retaliation list is not yet released to the public, pending briefings by the USTR to “cleared advisors” from industry. Indications are that it will be released in approximately 15 days. It is said to include imports in the following categories: high-tech, aerospace, machinery, electronics and footwear. However, the exact product list will not be known until publication of the final list.

An additional aspect of U.S. government retaliation is said to be an “Investment Reciprocity Regime” to counter Chinese restrictions and requirements on foreign investment in China. This may result in the U.S. Committee on Foreign Investment in the United States reviewing and prohibiting more Chinese investment in the U.S. than in years past.

At his testimony before the House Ways & Means Committee on March 22, 2018, U.S. Trade Representative Robert Lighthizer said that the list was designed to “put maximum pressure on China and minimum pressure on U.S. consumers.”

A major concern with the U.S. government’s Section 301 action so far is a lack of identification of actions that the Chinese can take to quickly satisfy the United States’ complaints. This could cause any new U.S. duties to remain in place for a long period, as was the case with past duties imposed under Section 301 against the EU.

II. Country Exemptions from Steel & Aluminum Duties Imposed Recently to Protect U.S. National Security

USTR Lighthizer identified a list of countries to be exempted from the 25% and 10% duties on Steel and Aluminum, respectively that were already imposed for national security reasons by the President under Section 232 of the Trade Expansion Act of 1962. Those countries are:

• Australia
• Argentina
• Brazil
• Canada
• EU members
• Mexico
• South Korea

With respect to Canada and Mexico, Mr. Lighthizer said that their exemptions are dependent on the success of further negotiations on NAFTA modifications.