Today, the US finally raised the additional duty on the 3rd group of import classifications from 10% to 25%. In September 2018, the US levied an additional 10% duty on that 3rd group of products and stated its intent to raise this additional duty to 25% at a future date. The US twice postponed the increase, but raised it today, May 10th, 2019.
Please note that, due to the transit time from ports in China to ports on the west coast of the US, there may be a 10 -14 day window for another postponement or a trade agreement before any goods that were already in transit are affected by this latest duty increase. Furthermore, the US has indicated that it is considering an additional 25% duty on a 4th group of product import classifications manufactured in China.
US trade Dispute with China
Pursuant to Section 301 of the Trade Act of 1974, as part of a continuing trade dispute with China, the United States last year levied higher customs duties on certain imports from China containing what it referred to as “industrially significant technologies”.
In June 2018, the US announced an additional 25% duty levied on an initial list of product import classifications. This was followed in August 2018 by an announcement of an additional 25% duty on a 2nd list of product import classifications. Lastly, in September 2018 an additional 10% duty was levied on a 3rd group of product import classifications with the stated intent to raise it to 25% at a future date, finally raising it to 25% on this 3rd group of products in May 2019. The levies on these three groups of products are assessed only on those products made in China, not on those products made elsewhere and exporting from China. The current list of the affected product classifications can be found here.
The number of product classifications affected by the Section 301 tariffs, the tariff costs involved, and the rules governing their application means that US importers should seek professional legal and accountancy advise when conducting regular import trade operations from China. The risks to the logistics flows (material, information, and cash) are too great not to consider. The Office of the US Trade Representative maintains a website here with useful information regarding the new tariffs and the process to seek exclusions from the additional tariffs on specific goods.
Mercury has a staff of highly experienced logistics/supply chain professionals and utilizes a global network of logistics agents, including China. We are prepared to assist you with all your logistics and supply chain needs. Please contact us if you have any questions. Thank you.
NOTE: Mercury is not a customs broker, law or accounting firm, and we do not offer legal or accountancy advice. Any information provided here is for informational purposes only and not a substitute for professional legal and/or accountancy advice.
On April 11, 2019, the EU government granted the UK an extension of the Brexit deadline until October 31, 2019. In addition to our previous recommendations, during this extension Mercury recommends some additional actions based on a letter that the UK customs agency, HM Revenue and Customs (HMRC), sent to companies that have UK VAT registrations.
- Shipments to or from Britain would fall under Britain’s own import/export regulatory regime and not the EU’s, potentially creating lengthy customs delays for shipments to/from Britain.
Shipments to/from Britain with origin/destination in the EU would need to undergo full customs entry procedures and would no longer be permitted to freely circulate in between (that is to move between Britain and the EU without undergoing customs entry).
- Would add to the time needed to deliver the shipments since they will need to clear customs at either end.
- Customs/taxes would need to be paid on entry to either Britain or the EU.
- Shipments to/from the remainder of the EU may no longer be permitted under EORI numbers issued in Great Britain (numbers starting with “GB”).
- You can create/increase the safety stock of goods that you may need in either Britain or a country in the EU – we can arrange storage with agents in either case.
- You can register for a non-resident EORI number in one of the other remaining EU countries to have when shipping to/from any EU country – this registration is required by the EU. We can point you in the direction of an EU country’s customs/EORI website for further information.
- You can investigate setting up entities in either Britain or an EU country as needed.
- Start planning now for a hard BREXIT.
- If you have a UK entity with only a VAT registration, then have it register for an EORI number - EORI Registration Page Info. Post-BREXIT, your UK VAT registration number alone may not suffice for continued UK import/export operations. Note that while the UK will extend the use of EORI numbers issued by HMRC, the EU may alter its acceptance of UK-issued EORI numbers; see recommendation above regarding non-resident EORI numbers issued by EU countries. **
- If you import from the EU into the UK, then register for Transitional Simplified Procedures (TSP). You’ll need a UK-issued EORI number. **
- If you export from the UK to the EU, then you should examine the customs information for the destination in the EU and also check the Prepare for EU Exit page. **
- If you have a UK entity, you should discuss the VAT ramifications with your UK tax agent as there will be some things you’ll want to address/decide post-BREXIT regarding VAT filing. **
- As the situation develops between now and the deadline, things will change quickly so please sign up for emails regarding BREXIT from the HMRC email update page and select “EU Exit” as one of the subscription options. **
Mercury has a staff of highly experienced logistics/supply chain professionals and utilizes a global network of logistics agents, including the UK and EU. We are prepared to assist you with all your logistics and supply chain needs during the BREXIT transition. Please Contact Us as soon as possible if you have any questions. Thank you.