US Trade

Section 232 global safeguard tariffs on steel and aluminium (effective since 23 March 2018)

Section 301 tariffs (List 1): 818 tariff lines (effective since 6 July 2018)

Section 301 tariffs (List 2): 279 tariff lines (effective since 23 August 2018)

Section 301 tariffs (List 3): 5,733 tariff lines (effective since 24 September 2018)

Section 301 tariffs (List 4A): 3,232 tariff line (effective since 1 September 2019)

Proposed Measures and Ongoing investigations

Section 232 on automobiles and automotive parts (Decision postponed for 180 days from 17 May 2019)

Section 232 on uranium 

Section 301 tariffs (List 4B): 555 tariff lines (suspended indefinitely)

List 1

The US on 6 July 2018 began collecting additional tariffs of 25% on US$34 billion worth of imports from Mainland China spanning 818 tariff lines (List 1). A large percentage of these goods are from Harmonized System (HS) Chapters 84, 85, 87, 88 and 90 – such as engines and motors; construction, drilling and agricultural machinery; machines for working minerals, glass, rubber or plastic; rail locomotives and rolling stock; motor vehicles and motorcycles; helicopters and aircraft; and testing, measuring and diagnostic instruments and devices.

For further information, please check List 1

As of 3 October 2019, eight sets of List 1 goods have been exempted. The latest exemptions from the additional tariffs include 92 specially prepared product descriptions, covering water-filtering apparatus, machines for slitting metal, woodworking planes, extrusion machines for processing rubber, safely valves, DC electric motors, digital optical fiber cables and more. These product exclusions are retroactive to 6 July 2018 and remain in place till 1 October 2020. Click here for more details.

List 2

Additional tariffs of 25% have been charged on a second list of goods since 23 August 2018. The second list comprises 279 tariff lines with a total import value of about US$16 billion. Many of these products are classified in HS Chapters 39, 84 and 85, but various products in Chapters 27, 34, 38, 70, 73, 76, 86, 87, 89 and 90 are also included. Affected goods include plastics and plastic products; industrial machinery; machinery for working stone, ceramics, concrete, wood, hard rubber, plastic and glass; cargo containers; tractors; and optical fibers. For further information, please check List 2.

As of 15 October 2019, three sets of List 2 goods have been exempted. The latest exemptions include 111 specially prepared product descriptions, covering self-adhesive tape,  fence panels of galvanized steel, steel chain-link fence panels, humidity triggered switches, certain buffering/cushioning units, thermometers, multimeters without a recording device, GPS wireless diagnostic tools and more. These product exclusions are retroactive to 23 August 2018 and remain in place till 1 October 2020. Click here for more details.

List 3

Tariffs of 10% have been applied on a third list of goods since 24 September 2018. The third list comprises 5,733 tariff lines with an import value of about US$200 billion. Affected products include, among others, various travel goods of HS code heading 4202; leather products of heading 4203; plastic products of Chapter 39; tires of heading 4011; textile products of Chapters 50 through 60; headwear of Chapter 65; furniture of heading 9403; lamps of heading 9405; certain printed-circuit assemblies classified under Harmonized Tariff Schedule of the US (HTSUS) 8473.30.11; and machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus, classified under HTSUS 8517.62.00. However, the list does not include any apparel products (Chapters 61 and 62), footwear products (Chapter 64), or toys and games (Chapter 95). For further information, please check List 3.

The USTR has since issued an official notice increasing the additional tariff on List 3 products from 10% to 25%, with effect from 10 May 2019. The affected products, however, are not subject to the tariff increase as long as they entered the US prior to 15 June 2019 (extended from 1 June 2019). Such products remain subject to the additional duty of 10% for this interim period.

As of 19 June 2020, a total of 14 batches of “List 3” products have been exempted from additional tariffs. The latest batch of exempted products includes 17 existing 10-digit numbered sub-items of the US Harmonized Tariff Schedule 0713.33.1040, 0713.50.1000, 1207.70.0020, 1207.70.0040, 1209.30.0090, 1209.91.6010, 1209.91.8010, 1209.91.8020, 1209.91.8040, 1209.91.8050, 1209.91.8060, 1209.91.8070, 2916.19.1000, 5603.14.9090, 5603.92.0090, 5603.93.0090 and 9403.70.4002. They include certain dried leguminous vegetable seeds for sowing (kidney beans, broad beans and horse beans); seeds of herbaceous plants other than petunia; certain vegetable seeds (cantaloupe, watermelons, bell peppers, carrots, radish, cucumbers, lettuce, squash, and tomatoes); potassium sorbate; certain impregnated, coated or covered non-woven fabrics (man-made filaments which are not "imitation suede” and weigh more than 150g/m2 and other textile materials than man-made filaments which are not "imitation suede” and weigh between 25g and 150g/m2) as well as toddler beds, bassinets and cradles of reinforced or laminated plastics.

In addition, the exclusions also cover 61 specially prepared product descriptions, covering freeze-dried or frozen bloodworms, brine shrimp; dried green seaweed; certain chemicals; children's paint sets, organic surface-active liquid for washing the skin; artificial graphite in powder or flake form; handbags, garment travel bags; flooring planks; albums for samples or collections; equipment for scaffolding; drums and barrels of stainless steel; wind turbine hubs; portal cranes; battery holders for bicycle signaling apparatus; unassembled non-upholstered chairs with metal frames; certain floor-standing jewellery armoires; etc.

These product exclusions are retroactive to 24 September 2018 and remain in place until 7 August 2020. Click here for more details.

List 4

US President Donald Trump on 1 August 2019 announced the imposition of tariffs on all the US$300 billion worth of imports from Mainland China previously excluded from Section 301 tariffs (List 4), effective from 1 September 2019. The new levy covers all apparel, footwear, toys, jewelry, watches and clocks among others, but excluded pharmaceuticals, certain pharmaceutical inputs, select medical goods, rare earth materials, and critical minerals.

On 13 August 2019, the USTR announced details on the imposition of an additional tariff of 10% on these List 4 Mainland Chinese imports.  Based on health, safety, national security and other factors such as comments and petitions received during public hearings and reviews, a total of 25 tariff lines were removed from the proposed List 4 announced on 13 May 2019. The final List 4 (comprising List 4A and List 4B) now includes 3,787 tariff lines.

List 4A items (3,232) are subject to the additional tariff from 1 September 2019, while corresponding levies on the rest or List 4B items (555) -- including mobile phones, laptop computers, video-game consoles, certain toys, computer monitors, and certain items of footwear and clothing -- are delayed to 15 December 2019.

The USTR announced details on applications for exclusion from list 4A products under Section 301. The USTR will accept exclusion submissions from 31 October 2019 to 31 January 2020.  Exclusions will be effective from 1 September 2019 to 31 August 2020. Please check here for details.

As of 19 June 2020, a total of five batches of “List 4A” products have so far been exempted from additional tariffs. The latest batch of exempted products includes two existing 10-digit numbered sub-items 5210.11.4040 and 5210.11.6020 of the US Harmonized Tariff Schedule to cover certain types of unbleached plain weave sheeting, poplin or broadcloth; and 32 items of specifically described products of duck down or goose down; cyanuric chloride; kneeling pads of plastics; plastic connecting accessories; printed books in Chinese; gloves; sets for pillows and quilts; round wire of nonalloy steel; ring-sealing devices for loose-leaf folders; valves part, lithium Ion batteries; optical channel separators; LCD display main board assemblies; glasses frames; LCD modules, watch cases; watch faces; wristwatch hands; child safety seat parts; unfinished pads and seats for weight-training exercise machines; fishing hook; mop heads; brooms and brushes; and electric spark lighters.

These product exclusions are retroactive to 1 September 2019 and remain in place until 1 September 2020. Click here for more details.

Latest Development

In response to Mainland China’s 23 August 2019 announcement of additional tariffs on US-origin goods worth US$75 billion, US President Donald Trump on the same day announced that existing 25% tariffs on US$250 billion of mainland-origin goods would be increased to 30% from 1 October 2019 and the 10% tariffs scheduled to go into effect for List 4A items on 1 September 2019 and List 4B goods on 15 December 2019 would be increased to 15%.

Mr Trump on 11 September 2019 announced that he had agreed to postpone an increase in tariffs (from 25% to 30%) on US$250 billion worth of mainland-sourced goods from 1 October 2019 to 15 October 2019 as a good-will gesture.  However, on 11 October he said the US would suspend the tariff increase as the two sides had reached an initial deal, with the mainland pledging to buy American farm products worth US$40-50 billion.

Mr Trump signed the first phase of trade deal with the Mainland’s Vice Premier Liu He on 15 January 2020 in Washington. The mainland has committed to buy an additional US$200 billion of American manufacturing, agricultural and energy goods and services by 2021. These cover a wide range of manufactured goods such as industrial machinery, electrical equipment and machinery, pharmaceutical products, aircraft, vehicles, optical and medical instruments, iron and steel, as well as agriculture and hydrocarbon products including oilseeds, meat, cereals, cotton and seafood, liquefied natural gas, crude oil, refined products and coal. The deal also covers services such as intellectual property (IP), business travel and tourism, financial services and insurance, cloud and related services.

The US cancelled a new tranche of import duties on mainland goods (List 4B) and agreed to halve the 15% tariffs on List 4A products starting from 14 February. However, the US will maintain the 25% additional duties on mainland goods on Lists 1, 2 and 3. Full text of the agreement.

As the city is a separate customs territory from the mainland, Hong Kong-origin products, like those of many other trading partners of the US, will be subject to the global safeguard measures (that is, 201 tariff-rate quotas and 232 tariffs) but not the 301 tariffs. Having said that, as a re-export and trans-shipment hub, the city’s re-exports to the US originating from the mainland and relevant trade services could be affected by the 301 tariffs. Hong Kong manufacturers producing in the mainland for the US market are likely to be affected by the Sino-US trade conflict.

The phase-one trade deal between Mainland China and the United States could improve Hong Kong’s export performance and business sentiment in the short term. That said, Hong Kong businesses are advised to diversify their markets across the mainland, the Association of Southeast Asian Nations bloc, the Middle East and Latin America amid the uncertainties resulting from international trade policies and a slowing global economy.

Taking into account the uncertainties over the COVID-19-induced global economic downturn,  as well as the threat posed by prolonged trade disruption, the HKTDC forecasts Hong Kong’s exports will decline 10%  this year, down from the earlier prediction of a 2% fall.  Exporters are advised to be more proactive in diversifying their markets and enhancing product competitiveness, and to explore offering in-demand technology products and services.

If you are a trader (such as a distributor, importer or exporter), your mainland-origin or US-origin products could be subject to additional tariffs, which could result in reduced orders or lower profit margins.

If you are a services provider involved in shipping affected mainland-origin/US-origin products to the US/mainland, you will probably see a decline in business, as the tariffs will discourage relevant Sino-US trade, as well as a change in business patterns with regions such as Association of Southeast Asian Nations members and India becoming alternative sourcing or manufacturing destinations. Western Europe and Japan, along with other emerging markets in the Middle East, Africa and Latin America, will become new, expanded markets.

1. Obtain a company-specific or product-specific exclusion

   Section 232 tariffs on steel and aluminum – Product-based Exclusion Requests

   Steel, Aluminum

   Section 301 tariffs - Request for Product Exclusion Process

2. Consider another potential product classification

3. Use manufacturing relocation to shift the product’s official origin

4. Use a US foreign-trade zone or bonded warehouse to defer/delay paying duties

5. Apply duty reduction programmes such as the “first sale rule” to lower the price on which tariffs are appraised

For further information about the above strategies, please:

• Read these articles: Hong Kong exporters face challenges, Special measures give boost to SMEs, Overcoming Tariff Barriers, Surviving the Sino-US Trade Dispute: Recommended Strategies, Products Win US Tariff Exemption, Made in China Moves to Indonesia，US Export-levy Net Widens，Traders Face Complex World，
  HKTDC Research Seminar on “Prospering in a Time of Trade Tension: How to Ensure Your Business is Not a Trade War Casualty”　
• View this video: Seminar on Surviving the Sino-US Trade Dispute: Recommended Strategies and Past Case Studies (Cantonese and English)

In response to the US 232 tariffs, Beijing imposed additional tariffs on 2 April 2018 on a total of 128 US products with a combined import value of about US$3 billion. The first tranche of affected products, which is subject to a 15% tariff, covers seven categories and 120 tariff lines involving US$977 million in US exports to the mainland. These include wine, fresh fruit, dried fruit and nut products, ginseng, seamless steel pipe and modified ethanol. The second tranche of affected products, subject to a 25% tariff, covers eight tariff lines involving some US$2 billion in US exports to the mainland. These include pork and processed products as well as recycled aluminium.

In view of the US 301 tariffs, Beijing imposed on 6 July 2018 a reciprocal 25% tariff on a total of 545 US products which are also worth some US$34 billion, including a broad range of agricultural and food products (such as soybeans, sorghum, rice and dairy products) as well as raw cotton and automobiles. China subsequently expanded that list by adding another 333 products worth US$16 billion, including various chemical and energy products, plastics and articles thereof, certain rubber and certain medical equipment, effective from 23 August 2018.

On 3 August 2018, Beijing unveiled further plans to impose additional tariffs ranging from 5% to 25% on 5,207  items worth US$60 billion from the US, in response to US President Donald Trump’s 1 August 2018 directive to the USTR to consider raising the tariffs proposed on 10 July 2018 from 10% to 25%. On 18 September 2018, Beijing announced it would institute these new tariffs from 24 September 2018, but at revised rates of 5% for 1,636 items and 10% for 3,571 items.

On 13 May 2019, Beijing announced new tariffs effective from 1 June 2019 on US$60 billion worth of imports into the mainland from the US comprising four separate lists of products imported as follows:

•    for 2,493 tariff lines (including meat, beverage, cosmetic and chemicals for industrial use), the tariff rate would increase from 10% to 25%.
•    for 1,078 tariff lines (including edible oil, flavourings, rare earth metals, personal healthcare products and warm clothing), the tariff rate would increase from 10% to 20%
•    for 974 tariff lines (including animal, vegetable, potatoes and roasted peanuts), the tariff rate would increase from 5% to 10%
•    for 595 tariff lines, the tariff rate would remain 5%

In addition, Beijing announced on 13 May 2019 a pilot programme allowing companies that import, manufacture or use products subject to retaliatory tariffs on US goods to request an exclusion for those products. Each request will be evaluated based on (1) difficulty obtaining the product from sources other than the US, (2) material injury from the tariff to the requestor, and (3) any structural impact of the tariff on relevant industries. Any exclusions granted will remain in effect for one year. Click here for more details.

In response to US’s new 301 tariffs (List 4), Mainland China  announced on 23 August 2019 tariff increases of 5 -10 percentage points on US$75 billion US-origin goods in two batches with effect from 1 September 2019 and 15 December 2019. The levies of 5% to 25% on US-made cars and auto parts and components, suspended in April 2019, would also resume, with effect from 15 December 2019.

Mainland authorities on 11 September 2019 announced the first batch of 16 products excluded from additional tariffs on the US with effect from 17 September 2019 to 16 September 2020. More details here.

The mainland announced on 19 December 2019 a list of US chemicals that will be exempted from import tariffs. These include certain types of industrial glue and adhesives, industrial polymers and types of paraffin, which can be found in cosmetics and food. This is the second set of US goods to be excluded from the mainland’s first round of tariff countermeasures against US Section 301 duties. The exemptions will come into force from 26 December 2019 until 25 December 2020. The mainland announced in early December that it will offer a tariff waiver to "some" imports of major products US soybean and pork.

To promote the healthy and stable development of economic and trade relations with the US, the mainland will halve the additional tariffs (cut from 5% to 2.5% and 10% to 5% respectively) on about US$75 billion worth of goods imported from America, starting from 14 February 2020.

Trade and Industry Department (TID) (工業貿易署)

1. The TID provides several funding schemes Hong Kong companies can consider:
   SME Export Marketing Fund (EMF) – the cumulative funding ceiling for each enterprise has been raised to HK$800,000
   Dedicated Fund on Branding, Upgrading and Domestic Sales (the BUD fund) - the cumulative funding ceiling per enterprise under its Mainland Programme and Free Trade Agreement Programme has been increased to HK$2 million
2. The TID has set up a one-stop service platform (Tel: 2398 5405; Email: acr_reg@tid.gov.hk) on the latest developments of the United States trade issue.

Export Credit Insurance Corp (HKECIC) (香港出口信用保險局)

The HKECIC has announced special enhanced measures to support Hong Kong exporters, especially small and medium-sized enterprises (SMEs), amid the trade issue and rising credit risks. These measures include offering six free buyer credit assessments for each Hong Kong exporter, providing a 30% Small Business Policy premium discount and raising each US buyer’s credit limit 20% to a maximum HK$5 million. The HKCECIC has extended the special enhanced measures to 30 June 2022 to help Hong Kong exporters especially SMEs cope with the rising credit risks and uncertain trading environment caused by the mainland-US trade disputes.

Details on different types of insurance policies and a free quotation are available here.

Credit check for Hong Kong SMEs

Hong Kong Mortgage Corporation Limited (香港按揭證券有限公司)

The HKMC Insurance Limited has announced additional support measures, which include halving the annual guarantee fee rates, increasing the maximum loan amount to HK$15 million and lengthening the maximum loan guarantee period to seven years, to further ease the financial burden on enterprises and help them obtain finance from lending institutions. SME borrowers may defer principal repayment, making just interest payments during a grace period. The new relief measure took effect on 4 September 2019 and will last for one year.

SME Financing Guarantee Fee Calculator

1. Provide information and training to help you make informed decisions and plan ahead:

   The HKTDC has launched a series of seminars to give SMEs advice and insights so they can embrace the challenge. Information on upcoming seminars will be available here.

2. Organise our own – or participate in – leading industry events worldwide to help you explore new market opportunities and establish fresh contacts:

   Product promotion events in emerging markets

   Promotion opportunities in developed markets (excluding the US)

   Upcoming business missions

   Business missions consist of meetings, visits and networking opportunities in specific markets, based on specified industry(ies). You will meet not only potential partners and clients, but also members of the local chambers and government representatives.

3. Enhance business matching at trade fairs and missions to increase business opportunities

   Each year, the HKTDC organises more than 30 world-class trade fairs in Hong Kong, attended by over 750,000 international buyers from some 200 countries and regions. Hong Kong manufacturers and exporters are encouraged to take advantage of various HKTDC exhibitions to diversify their markets and meet new potential customers. Together with the HKTDC Online Marketplace and HKTDC Business Matching, a service that draws on the Council’s more than 50 years of experience in matching Hong Kong and overseas companies, the HKTDC offers a year-round, customised suite of integrated marketing and business-matching services dedicated to helping Hong Kong exporters connect with global customers.

1. Trade and Industry Department (TID)
2. HKSAR Government’s support for local and overseas enterprises
3. Office of the United States Trade Representative (USTR)
4. US Department of Commerce (USDOC)
5. US Bureau of Industry and Security (BIS)