This post is not intended to provide tax or legal advice and should not be relied upon as such. You should consult your financial, tax and legal advisors before making any financial or legal decisions about you or your business.
Arguing that China did not follow through on promises to both increase agricultural purchases from the United States and stop the sale of Fentanyl into the U.S., President Trump announced an additional 10% tariff on $300 billion worth of goods imported from China that are not already subject to Section 301 tariffs. These tariffs on List 4 goods would take effect September 1, and this list covers a wide range of products, including apparel, footwear, and manufactured textile products, among others.
The impact of the announcement has been immediate. Apple – which warned in a June 17 letter to U.S. trade representative Robert Lighthizer that List 4 tariffs would affect “all of Apple’s major products” – saw its stock down more than 2% at one point on Tuesday, erasing earlier gains. More broadly, the Dow dropped more than 200 points following the Trump tweet and the benchmark 10-year Treasury interest rate fell to levels last seen in 2016.
This announcement marks a dramatic increase in protection for at least three reasons.
...during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%...— Donald J. Trump (@realDonaldTrump) August 1, 2019
As these new tariffs will affect even more shippers – and just as we enter the critical peak shipping season – we expect companies to try and get ahead of the September 1 deadline. Here are three things you should know.
What’s more, you should work closely with your freight forwarding partner and customs broker to assess what, if any, impact these tariffs may have on your products. Feel free to take advantage of our U.S. Import Duty Calculator to assess potential costs as these tariffs take effect. And, even if your products aren’t included, remember you still likely need to mitigate increased shipping activity and capacity crunches.
Stay tuned for additional updates and insights. You can also read more about how U.S.-China tariffs are hindering business growth – and how Flexport is helping alleviate the resulting working capital constraints through Flexport Capital’s suite of trade finance solutions.
Hear directly from Chief Economist Dr. Phil Levy on the current economic climate and its impact on airfreight in our upcoming webinar: