December 2019: tariff watch - proceed with caution

Caution

As we approach the end of 2019, we need to remain vigilant in our “Tariff Alert” watch for new and expected changes for some goods that will be imported into the US. Over the past week, the US administration has announced some new tariffs on steel and aluminum that were previously enacted, and some possible new tariffs on a list of goods with French origin. And of course, we can’t talk tariffs without addressing the elephant in the room: the US/China trade war; lest we forget the pending China Tranche IV(b) that goes into effect on December 15, 2019.

The following details are summarized by country:

France enacted a three percent tax in 2019 on total annual revenues generated by digital companies and Internet advertising services to or aimed at, French users. The USTR said Dec. 2 that it has determined that this digital services tax discriminates against U.S. companies, and is also unusually burdensome. 

In response, the USTR is proposing to impose additional tariffs of up to 100 percent on products from France that are drawn from a preliminary list that contains 63 tariff subheadings. Affected products include yogurt, butter, cheese, cosmetics, handbags, and dinnerware.

The USTR is also considering whether to impose fees or restrictions on services of France. USTR will hold a hearing on these issues on January 7 and is accepting written comments on them through January 6. It is unclear when the proposed tariffs or other measures might take effect.

France has stated that they will impose new tariffs on US goods, however at this time, no list nor timeframe has been stated. France is not alone in the EU in targeting digital companies, as other countries are preparing their taxes. There will be more information to follow in the coming months.

Brazil and Argentina:
In March 2018 the US suspended the 25 percent additional tariff on steel products and a 10 percent additional tariff on aluminum products since both countries agreed to be subject to U.S. quotas for these items. On Dec. 2 the US stated that “effective immediately” he would “restore” the tariffs on “all steel and aluminum that is shipped into the U.S.” from Brazil and Argentina because of currency devaluation. 

China:
In August 2019, the US announced a 15% tariff Tranche IV(b) from China set to go into effect on December 15, 2019. Tranche 4b is a list of products that do not count on any of the previously listed items.  

Takeaways
Tariffs, classifications values, and origin all play an important role in the current supply chain strategies for companies. Should you move your supply chain? How much does this change costs?  How long will it take to make this change? Are these changes short or long term? Can I still survive in this new global world of business or should I wait it out? These are all questions that companies have asked to avoid the additional expense and delays to their customers.  

What will 2020 bring?  

We do not know the answer yet, but stay tuned and wait for the next round of talks/ discussions and agreements – things could get very interesting.