Trump Is Denying Product Exclusions From New China Tariffs

(Bloomberg) -- The Trump administration hasn't put a process in place for companies to get exemptions from 10 percent tariffs it's imposing on $200 billion of Chinese goods, unlike earlier rounds of the duties, four people familiar with the matter said.

The U.S has justified its decision by saying that it's giving companies more than three months to transition their supply chains away from China before it raises tariffs to 25 percent in January, according to one of the people.

It's unclear whether the government will start offering exclusions once that rate increase occurs next year, the four people said, speaking on the condition of anonymity because the plans aren't public. The 10 percent duty is set to take effect on Sept. 24.

A spokeswoman with the U.S. Trade Representative's office said there was no announcement at this time regarding an exclusion process for tariffs on the $200 billion of goods.

The decision is likely to put additional pressure on American companies that say President Donald Trump's trade dispute with Beijing is increasing uncertainty and boosting costs. Industry groups including the National Retail Federation have been pushing the administration to spare firms and consumers from import tariffs.

“Companies cannot shift their supply chains on a dime. It takes months, if not years, to find new suppliers who can meet all of a retailer's sourcing requirements,” according to the federation's vice president of supply chain and customs policy, Jonathan Gold. “These tariffs will unfairly punish U.S. companies and ultimately U.S. consumers.”

Unfair Practices

The administration argues that tariffs give the country leverage as it pushes China to reduce trade barriers and protect American firms from unfair practices, such as theft of intellectual property.

The latest round of duties comes on top of a 25 percent tariff already imposed on about $50 billion in Chinese goods, which spurred counter-tariffs from Beijing. China plans to retaliate on the U.S.'s $200 billion tariff round by slapping levies on $60 billion of American goods.

The White House is giving companies until Oct. 9 and Dec. 18 to seek exclusions from the tariffs on $50 billion of goods, depending on when they were first implemented. Those seeking relief must address whether the product is available only from China, the duties would cause severe economic harm to the company or U.S. interests, and the good is strategically important. Companies so far have filed about 1,700 exclusion requests and comments.

There's a separate process for seeking product exclusions from the steel and aluminum tariffs that Trump imposed in March on most U.S. trading partners. The government as of Sept. 17 had received more than 40,000 exclusion requests and decided on fewer than 5,000 cases, according to Commerce Department data.

"We have a recent survey of our membership, and three quarters of our companies are going to be hurt by the U.S. tariffs," American Chamber of Commerce in China Chairman William Zarit said Friday in an interview on Bloomberg Television.

"We're seeing that -- in terms of the supply chains, which are being so disrupted -- that about a third of the companies are looking for new supply chains from the U.S., about a third of the companies looking for new supply chains from China, and about a third of the companies are putting off investment decisions until they see the dust settle," Zarit said.

--With assistance from Matthew Boesler.

To contact the reporters on this story: Jenny Leonard in Washington at jleonard67@bloomberg.net;Mark Niquette in Columbus at mniquette@bloomberg.net

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Randall Woods, Sarah McGregor

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