Effective September 24, a third set of tariffs will go into effect on $200 billion of Chinese imports. Initially the tariffs will be set at 10% through the end of the year and will rise to 25% on January 1, 2019. While 6,031 tariff lines were initially proposed, the negotiation period saw the removal of 286 tariff lines including safety gear, car seats, play pens and some consumer electronics. The full list of items in the third tranche can be found here.* The announcement on Monday by President Trump as he directed this new tranche executed included a warning that another $267 billion could be applied if the Chinese government retaliates on these tariffs.
Almost immediately the Chinese declared they would retaliate with $60 billion of tariffs against US products. Trade negotiations between the US and China are expected to continue through these accelerating tariffs as the two sides try to find some common ground in the dispute. Considering the Chinese economy has slowed, they could be more willing to negotiate on topics of intellectual property and market expansion of US interests.
While the first set of tariffs were scheduled to ease the impact on consumers, this round is expected to escalate prices on retail goods going into the holiday shopping season. Further acceleration could lead China to stop or suspend exports to the US, impacting the importation of components necessary to many US supply chains. As some companies have started looking for new markets in an attempt to work around the tariffs, reinventing entire supply chains that are already in process will cost US companies time and money, while likely still not being ready before the holiday season.
We at Everglory Logistics will continue to monitor these developments and encourage our clients to reach out to us with any questions or concerns.