Article written by:
Director of Tax Services
On January 15, 2020, the U.S. and China signed a “phase one” trade agreement previously announced by the United States Trade Representative (USTR) in December 2019. The complete text of the trade agreement can be read here.
When the “phase one” trade agreement was first announced, the U.S. had suspended the additional 15-percent tariff on List 4B goods imported from China that was scheduled to take effect on December 15, 2019. The formal text of the “phase one” trade agreement does not directly address any further tariff reductions. However, the USTR published a separate Federal Register notice on January 22, 2020, which noted a reduction of tariffs on List 4A goods from 15 percent to 7.5 percent, scheduled to take effect on February 14, 2020. The complete text of this Federal Register notice can be read here. Further, the U.S. will maintain the 25-percent tariffs currently in place on List 1, 2, and 3 goods imported from China totaling approximately $370 billion.
According to the “phase one” trade agreement, China will increase its imports of certain U.S. goods worth no less than $200 billion by the end of 2021, along with commitments in other areas including intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.
Beyond this action, no further developments in the ongoing trade negotiations between China and the U.S. are expected this coming year due to November’s impending U.S. presidential election.
If you have any questions on this, or how you might be able to mitigate the continuing cash impact of the Section 301 China tariffs, please your GBQ tax advisor.