$200 Billion More in Proposed Tariff, Tensions Escalate

In lieu of returning to the negotiating table, on Tuesday, July 9 2018, the Office of the United States Trade Representative (USTR) released a proposed list of $200 billion in Chinese imports that could receive an additional 10 percent in an escalating tit-for-tat exchange over unfair trade practices and intellectual property rights at the root of Section 301 investigation.  The 6,031 tariff lines impact everything from food, fuel, chemicals, machinery parts, apparel, and more.

On July 6, 2018, the United Stated implemented a 25 percent duty on 545 tariff lines worth $34 billion in the first round of Section 301 tariffs, with an additional $16 billion under public review.  China’s Ministry of Commerce, while condemning unfair trade accusations, imposed an equivalent retaliatory 25 percent tariff in two parts of equal measure to the United Stated action on the same day.

“In light of China’s response to the $50 billion action announced in the investigation and its refusal to change its acts, policies, and practices, it has become apparent that U.S. action at this level is not sufficient to obtain the elimination of China’s acts, policies, and practices covered in the investigation,” stated the USTR notice.  “Accordingly, the Trade Representative is proposing to modify the action in this investigation by maintaining the original $34 billion action and the proposed $16 billion action, and by taking a further, supplemental action.”

The Chinese government released a statement condemning U.S. action, “To protect the core interests of the nation and its people, the Chinese government will be forced to impose necessary countermeasures.”  China has already begun a dispute with the World Trade Organization (WTO), but the U.S. has blocked several appointments to replace appellate judges, making it unlikely for the dispute system to operate until 2019 at the latest.

PUBLIC COMMENT & REVIEW

July 27, 2018:Due date for filing requests to appear and a summary of expected testimony at the public hearing, and for filing pre-hearing submissions.

August 17, 2018:Due date for submission of written comments.

August 20-23, 2018:The Section 301 Committee will convene a public hearing.

August 30, 2018:Due date for submission of post-hearing rebuttal comments.

As Green continues to monitor the situation, stay up-to-date on freight news by following us on FacebookTwitter, and LinkedIn. For continuous updates, make sure to check out our website at greenworldwide.com.

China-US Trade Tariffs Go Live, Industries Urge Negotiation

It’s official.  At 12:01 AM on July 6, 2018, the United States implemented the first round of additional 25 percent Section 301 tariffs on 818 lines targeting “Made in China 2025” industrial imports to U.S.  China countered almost immediately with its own 25 percent tariffs on 545 lines of U.S. products ranging from vehicles to agriculture.  After months of unsteady back-and-forth negotiations, the two economic powerhouses still haven’t been able to agree on intellectual property theft and unfair trade practices that are at the core of the dispute.  But the United States Administration isn’t finished, with a secondary list under public review in July, an additional $16 billion in Chinese imports is on the chopping block, but even more could be anticipated.  The President hinted to reporters on July 5th that more could be coming down the pipe if progress isn’t made, “we have $200 billion in abeyance, and then after that $200 billion, we have $300 billion in abeyance.”

China’s Ministry of Commerce released a statement declaring, “The United States violated the WTO rules and launched the largest trade war in economic history to date… We will promptly inform the WTO about the situation and work with countries around the world to jointly safeguard free trade and the multilateral system.”

U.S. industries have shown mixed support of the new international trade policies; while most recognize the need for better treatment of U.S. intellectual property and fair trade, they don’t believe tariffs are the way to bring about an amicable long-term solution.  The National Association of Manufacturers, Retail Industry Leaders Association, United States Council for International Business, and U.S.-China Business Council have all urged both parties to return to the negotiating table before further escalation continues.

Exclusion Requests

For companies seeking reprieve, the Office of the U.S. Trade Representative released procedures for exclusionary requests from Section 301 tariffs, due by October 9, 2018.  Exclusions will be made on a “product basis…a particular exclusion will apply to all imports of the product, regardless of whether the importer filed a request,” USTR confirmed.

  • The public will have 90 days to file a request for a product exclusion; the request period will end on October 9, 2018.
  • Following public posting of the filed request on Regulations.gov, the public will have 14 days to file responses to the request for product exclusion. After the close of the 14 day response period, interested persons will have an additional 7 days to reply to any responses received in support of or opposition to the request.
  • Exclusions will be effective for one year upon the publication of the exclusion determination in the Federal Register, and will apply retroactively to July 6, 2018.

As Green continues to monitor the situation, stay up-to-date on freight news by following us on FacebookTwitter, and LinkedIn. For continuous updates, make sure to check out our website at greenworldwide.com.

 

Quarterly Freight Market Overview

Trade & tariffs

If you’re a business owner, then chances are you’ve been following as the United States trade agenda sent waves of change across international waters.  After implementing  tariffs on imported steel and aluminum, the Administration also announced the first round of additional 25 percent Section 301 tariffs on China, starting July 6, 2018.  United States allies seemed blind sighted that exemptions were not extended for long-time friends and responded with retaliatory tariffs of their own.

The European Union has placed tariffs of $3.2 billion on U.S. products such as jeans, bourbon, motorcycles, and agriculture products.  This week, Harley Davidson announced intentions to move production off-shore to combat the increase.  Canada will implement $12.4 billion in tariffs against U.S. imports starting July 1, 2018, while Mexico has already imposed a $3 billion penalty again American exports.  China, the main target of the trade restrictions has also promised reciprocating penalties on $50 billion of U.S. products.

But international governments aren’t the only ones taking action.  The American Institute for International Steel (AIIS), and two steel importers, Sim-Tex and Kurt Orban Partners, have filed suit over the constitutionality of Section 232 of the 1962 Trade Expansion Actin providing such broad authority to the president with no judicial review.

Ocean freight market

While space and rates are holding steady, most ocean carriers will be pushing for general rate increases (GRIs) as they gear up for peak season.  While demand remains strong, trade policy could impact the volume for most upcoming markets.  Lean margins for carriers led to a slew of consolidations over the past few years and shippers are looking forward to more efficient services at low contracted rates. But on the heels of a new International Maritime Organization (IMO) to implement a .5% sulphur cap on marine fuel by January 1, 2020 could add $50 billion to ocean carrier bottom lines.

TRANSPACIFIC EASTBOUND

Asia to both U.S. coasts – Open space, GRI announced for July 1.

TRANSATLANTIC WESBOUND

Europe to both U.S. coasts – Space is tight with bookings recommended 2 weeks in advance.  GRI announced for July 1.

EXPORTS

U.S. Exports to Asia and Europe – Emergency bunker surcharges announced for July 1.  Space is tight, book at least 10 days in advance.

Airfreight update

Japanese Airline Nippon Cargo Airlines (NCA) suspended operations after government inspection grounded eleven freighters for incomplete maintenance records.  The suspension is expected to impact capacity out of Asia, although at present, the market is stable with plenty of space available.  Shippers still suffering from flashback of last year’s tight air market are shopping for options to the upcoming holiday peak season.

Domestic

The U.S. trucking market is tense as providers have started to settle into the ‘new normal’ under electronic logging device (ELD) implementation.  Known to “fudge” service time records, truckers are now required to keep electronic logs or be forced off the road to combat crash-related fatalities due to driver distraction or fatigue.

The ELD has impacted most cargo operators that aren’t used to advanced scheduling, airfreight shipments with notoriously shorter free time, and long hauls over 100 air miles from pick-up.  Some ocean carriers have stopped offering door deliveries while rail providers have also shifted operations.  Under pressure from shippers, domestic carriers are seeking updates to the hours-of-service through the Honest Operators Undertaking Road Safety Act, presented in Congress this month, to extend an ELD exemption from 100 air miles to 150 air miles.

Stay up-to-date on freight and logistics by following Green Worldwide Shipping on FacebookTwitter, and LinkedIn.

 

Tariff Troubles, Brace your Bonds

On July 6th, Section 301 tariffs will apply 25 percent duties to the first list of impacted imports from China, with a second list waiting to be published.  In addition, Section 232 tariffs are levying 25 percent duties on imported steel and 10 percent on aluminum.  Shippers must consider the impact additional taxes will have to the sufficiency coverage of their Customs import bond.

Take a look at the bond limit increase of a company importing $10,000,000 of steel over the course of 12 months:

Product (duty free) 0.00
Limit (10% of duties, taxes & fees) *per CBP Up to $50,000 in coverage
Product (duty free) + Section 232 Tariff (25%) $2,500,000
Limit (10% of duties, taxes & fees) *per CBP $300,000

Bond sufficiency is determined over a rolling 12-month period, and while shippers may not need to immediately replace their bond, it’s important to track your coverage needs as trade negotiations continue.  Insufficient coverage may lead to rejection, delays and additional costs.  Bonds showing egregious deficiencies can be immediately canceled by Customs until a sufficient bond can be produced.

If additional duties will play a significant role in upcoming business, consider speaking to your bond provider or Green freight expert to determine the best course of action.

As Green continues to monitor the situation, stay up-to-date on freight news by following us on FacebookTwitter, and LinkedIn. For continuous updates, make sure to check out our website at greenworldwide.com.

25 Percent Tariffs for ‘First Set’ of China Imports, Full Details

As reported in May, the Office of the United States Trade Representative (USTR) published the list of products from China that will be subject to Section 301 tariffs.  Citing unfair policies and practices related to the transfer of technology and intellectual property rights, the administration released a statement confirming United States commitment to bringing balance to trade relations with China.

Covering 1,102 tariff lines, the $50 billion in trade value focuses on goods that contribute to the “Made in China 2025” policy and focuses on industries such as aerospace, communication & information technologies, robotics, industrial machinery, new materials, and automobiles (excluding cell phones and televisions).

Implementation has been split between two sets of lists; the first, containing 818 lines covering $34 billion worth of imports, will receive additional duties of 25 percent starting July 6, 2018. The remaining $16 billion, 284 tariff lines, will undergo further review for public notice and comment.  For U.S. companies seeking the exclusion of particular products, the USTR will publish details of the process in the next few weeks.

In regards to expected retaliation, the White House confirmed:

“The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China.”

As Green continues to monitor the situation, stay up-to-date on freight news by following us on FacebookTwitter, and LinkedIn. For continuous updates, make sure to check out our website at greenworldwide.com.