On August 18, 2017, US Trade Representative (USTR) Robert Lighthizer initiated an investigation to determine whether the acts, policies and practices of the Chinese government related to technology transfer, intellectual property and innovation are unreasonable or discriminatory and either burden or restrict US commerce under Section 301 of the Trade Act of 1974, as amended (19 U.S.C. § 2411). On March 22, 2018, USTR released its Section 301 report, finding that China’s policies harm the US economy by at least US$50 billion per year. Simultaneously, President Trump signed a Presidential Memorandum outlining a series of remedies that his Administration may take, including plans to increase tariffs on certain Chinese imports.
On April 3, USTR released a proposed list of around 1,300 tariff lines representing US$50 billion worth of Chinese exports that could face an additional 25% tariff. Within 12 hours, China issued its own list of tariff lines that could face an additional 25% tariff. At the end of the week, President Trump directed his Administration to examine whether the US should impose another US$100 billion in tariffs on Chinese exports to the US. China has vowed further retaliation.
As the US and China continue to exchange escalating threats, US and Chinese businesses alike find themselves caught in the middle of what could become a costly trade war. Businesses must assess their supply chains and prepare to engage with lawmakers and Trump Administration officials to mitigate the impacts of these proposed actions.