October 15 Tariff Hike Cancelled

On October 11, 2019, president Trump announced the cancellation of the October 15 tariff hike, providing a considerable relief on tariffs applied to Chinese imports. That hike would have taken Section 301 additional tariffs of 25 perce​nt to 30 percent on Lists 1, 2 and 3, about $250 billion worth of imports.

This announcement comes as part of the first phase of a deal with China related to intellectual property, financial services and agricultural sales. The president disclosed that China would buy as much as $40 billion to $50 billion worth of American commodities and that good progress had been made on issues around technology transfer from American companies to Chinese partners.

Provided that all details are worked out, president Trump expects the first phase of the U.S.-China deal to be signed at the Asia-Pacific Economic Cooperation (APEC) meeting on November 16 or 17.

The next phase of trade talks would begin immediately after the first deal is signed. It is not clear at this point whether the December 15 round of tariffs will take place as planned.

AGL will continue to monitor this situation closely and advise you of any additional related details.

POLA/POLB Marine Terminal Gates Closure

The International Longshore and Warehouse Union (ILWU) will observe a special stop work meeting for union business on Thursday, Oct. 3, 2019, starting at 5 p.m. Consequently, no marine terminal gates at the Ports of Los Angeles and Long Beach will be operating between 5:00 p.m. October 3rd through 3:00 a.m. October 4th.

Incoterms 2020

The International Chamber of Commerce (ICC) has officially released Incoterms 2020. The updated Incoterms will take effect January 1, 2020 and will replace the current Incoterms (Incoterms 2010). The ICC has published the Incoterms for purchase on their website.

Per the ICC, some of the major changes from the current Incoterms are as follows:

  • Incoterms® 2020 provides for demonstrated market need in relation to bills of lading (BL) with an on-board notation and the Free Carrier (FCA) Incoterms® rule.
  • Incoterms® 2020 aligns different levels of insurance coverage in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP).
  • Incoterms® 2020 includes arrangements for carriage with own means of transport in FCA, Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
  • There is a change in the three-letter name for Delivered at Terminal (DAT) to DPU.
  • Incoterms® 2020 includes security-related requirements within carriage obligations and costs.

Tariff Increase Delayed

President Trump announced yesterday that he will delay the increase in tariffs on $250 billion worth of goods from October 1 to October 15 as a “gesture of good will” to China. Trump stated that the move was “at the request of the Vice Premier of China, Liu He.”

Liu He will be in Washington in early October for negotiations. Barring an agreement being reached between the two sides, the tariffs on Section 301 Chinese Imports for List 1, List 2, and List 3 (with the exception of tariffs where exclusions have been granted) will increase from 25% to 30% on October 15.

Additional Tariffs Announced

U.S. Trade Representative (USTR) has advised that the additional ten percent tariff on List 4 section 301 products announced earlier in the year has been increased to fifteen percent. The products covered by Annex A (List 4A) will be subject to the 15 percent tariff beginning September 1, 2019 whereas the products covered in Annex C (List 4B) will be subject to the tariff beginning December 15, 2019. No mention has been made by the USTR of exemptions to the five percent increase.

Per the USTR notice, the increase was at “the specific direction of the president.” The notice cites China’s reaction to the U.S. announcement of the initial 10 percent increase as playing a role in the decision to increase the additional tariff from ten to fifteen percent. Per the notice, efforts were not made by China to address the underlying problems regarding trade between the two countries; instead, China imposed a retaliatory tariff on U.S imports. According to the USTR website, the status of the Exclusion Process for the products subject to the tariff is still to be announced.

Tariff Exclusions and Delays

U.S. Trade Representative (USTR) has just announced that certain products will be excluded from the additional 10% tariff on Chinese imports set to take effect on September 1. Per the announcement, these products will be excluded due to health, safety, national security or “other” factors. The USTR also noted that the additional tariff on certain products including cell phones, laptop computers, video game consoles, certain toys, computer monitors and certain items of footwear and clothing will be delayed until December 15. An exclusion process for products that remain subject to the additional tariff will be conducted.

Below are links to the lists of products on which the tariff will be imposed on September 1 and the list of products on which it will be imposed on December 15.

USTR List 4A (Effective September 1, 2019)

USTR List 4B (Effective December 15, 2019)

Tariff Increase Effective September 1

Please be advised that President Donald Trump has stated a 10 percent tariff will be imposed on List 4 goods as of September 1. List 4 includes nearly all goods imported from China that have not had a tariff imposed on them yet.

Trump’s reasoning for the tariff is a lack of agricultural purchases by China and their continued sale of fentanyl to the U.S. However, he indicated a desire to continue positive dialogue with Chinese President Xi Jinping.

AGL will continue to keep you apprised of any additional news concerning this situation.

PierPass Increase Effective August 1

Please be advised that the Traffic Mitigation Fee (PierPass) at the ports of Los Angeles and Long Beach will be increased by 1.9 percent beginning August 1, 2019. The incremental fee mirrors the 1.9 percent increase in longshore wage and assessment rates that went into effect on June 29.

The TMF will increase from $31.52 to $32.12 per TEU (from $63.04 to $64.24 per FEU) and is assessed on non-exempt containers. Exempt containers include empty containers, containers subject to a fee imposed by the Alameda Corridor Transportation Authority, and transshipment cargo. Though AGL’s billing process remains unchanged, the rates billed will be adjusted to reflect the change in PierPass.

AGL will continue to monitor supply chain related events and advise you of any information that may impact the planning of your supply chain.

Tariff Exclusions Portal

Please note that the office of the United States Trade Representative (USTR) has announced the opening of a new portal for exclusion requests related to the Trump Administration’s third tranche of Section 301 tariffs on Chinese products.  The portal is expected to open at 12pm ET, June 30.

Requests for exclusion will be due through the portal by September 30 and responses provided 14 days after the request is submitted.  Exclusions granted will be effective as of September 24, 2018, the date on which new tariffs of 10% on $200 billion in Chinese were implemented.

The official notice provided by the USTR can be reached here.

The portal through which exclusions must be submitted can be reached here.

List 3 Exclusions

Please be aware that the United States Trade Representative (USTR) has requested emergency approval from the Office of Management and Budget (OMB) to start collecting information for an exclusion process related to products on List 3; List 3 was originally impacted by a 10% tariff increase on September 24, 2018 and then increased to 25% on May 10, 2019. Approval for the exclusion process is expected by June 20 and, if approved, the process is expected to begin on June 30.

Requests for exclusions for List 3 goods will require greater detail than requests for List 1 and List 2 goods. Each request will only be able to cover a single product so it is advised that those wishing to file an exclusion begin compiling the necessary information as soon as possible.

Additionally, the USTR published a notice on May 13th requesting comments concerning an additional $300 Billion in imports from China (List 4). The Annex of HTSUS subheadings published in the notice for List 4 basically picks up all of the remaining products the U.S. imports from China that were not included in the previous lists, including most consumer goods.

Please note the following important dates for proposed action related to List 4:

• June 10, 2019- For requests to appear at the hearing, and summary of expected testimony.

• June 17, 2019 – For submission of written comments.

• June 17, 2019 – Hearing convenes before Section 301 Committee at the ITC.