This morning, the Ministry of Commerce (“MOFCOMM”) issued an official statement that it intends to impose tariffs on certain imported products of United States origin in retaliation for US tariff measures on steel and aluminium products announced earlier this month by Presidential Proclamation.
Products Impacted by China’s Retaliation
The retaliation list from MOFCOMM includes 7 categories of products across 128 different tariff headings and impacts approximately US$3 billion in imports from the US according to last year’s statistics. The products included in the list are fresh fruit, dried fruit and nuts, wine, modified ethanol, American ginseng, and seamless steel pipes. The retaliatory duties that MOFCOM intends to impose are 15% in addition to the duties already imposed under the Most-Favoured Nation Rate extended to all other World Trade Organisation (“WTO”) members. Other items such as pork and pork products, recycled aluminium, and several other items are proposed to be subjected to an additional 25% tariff on such imports from the US.
Legal Authority to Retaliate?
The ability of China to impose such immediate retaliatory tariffs within the WTO framework is a bit unclear. This really comes down to whether or not the tariff measures taken by President Trump for “national security” reasons are tantamount to a safeguard within the meaning of the WTO agreements. If so, then China’s immediate retaliation is well within its right to pursue. Certainly, the European Union had similar plans for immediate retaliation prior to making progress on exclusions for EU exporters.
If you export affected products to China and wish to discuss the impact on your business and options for planning, please feel free to contact me at +852 28334977 / 64696776 or william.marshall@tiangandco.com