President Trump announced on Friday, Dec. 13 the details of aPhase Onetrade deal reached with China that will result in the additional 15% duty on what is known as List 4B will NOT go into effect as planned. In addition, the increase of List 4A duties from 15% to 25% that was scheduled to take effect on Dec. 15 will also not go into effect.
In exchange, China has agreed to implement structural reforms in their economic and trade policies in the areas of intellectual property, technology transfer, agriculture, financial services, as well as currency and foreign exchange. China has also agreed to make substantial additional purchases of US goods and services ($200 billion), especially in the area of agricultural goods (~$50 billion), which will be welcome news to the ag community.
The President also announced that the US will soon reduce the current 15% being assessed on List 4A to only 7.5%. The timing of this reduction will be 30 days after the agreement is signed, which is currently planned for early January.
The 25% duties for Lists 1-3 that is currently in effect will remain in place for now. All exclusions in place will continue to be honored.
We anticipate aPhase Twotrade deal that will address Lists 1-3 at a later date and likely will be tied to how the current agreement is honored. The USTR has indicated that no new tariffs are planned as long as China continues to negotiate in good faith.
We recommend that any exclusion requests being sought should continue to be worked on despite these new developments. As we have seen in the past, the details can change rather abruptly.