This year, activity in the area of tariffs may result in changes to the supply chains, with changing tariff trends having a significant impact on the overall landscape of the global supply chain. Specifically, EU and Japan have been granted a certain amount of duty free quota (TRQs) in place of a flat 25% tariff on certain steel products. Additionally, the United States Trade Representative Office (USTR) is in the process of reviewing whether to continue China 301 Tariffs, some of which will be expiring soon. Congress is also acting in this area with the “Repeal Tariffs to Reduce Inflation Act,” which was introduced this month.
EU and Japan 232 TRQ’s
On January 1, 2022, quota opened for the EU for numerous steel products that can now be imported duty free up until a certain amount. After which, the 25% duty would be due (unless covered by a Commerce Department Exclusion). Similarly, on April 1, 2022, Japan was also granted certain amounts of duty free quota for steel products. The main difference between the EU and the Japan Agreement is that for EU products, 232 Exclusions do not count towards the allotted quota amount, whereas for Japan they do.
USTR – 4 Year Review of China 301 Tariffs
Like 232 Tariffs, China 301 Tariffs began in 2018. This year, the required 4 year review is being conducted by the USTR. On May 3, a Federal Register Notice was published announcing the initiation of the 4 year review. In Phase 1, parties that benefited from the 301 Tariffs have the chance to request that they be continued. In Phase 2, those who oppose the Tariffs will have a chance to request that they be eliminated on certain products.
UPDATE 10/19/2022: USTR Announces Next Steps in Statutory Four-Year Review of China 301 Tariffs. Comments are due between Nov. 15, 2022 and Jan. 17, 2023.
On June 8, 2022, legislation was introduced in the House of Representatives that would require the Treasury Department to make a report to Congress on the effects of 232 and 301 Tariffs (as well as others) on Inflation.
All these tariff trends should be watched as supply chains are likely to react to the changes in the Tariff landscape.
If you have any questions do not hesitate to contact us.