- The United States released a semi-final list of 1,102 Chinese products on Friday that would be subject to a 25% tariff as early as July 6, 2018.
- The list includes 818 product lines from the original 1,333 proposed, and was dwindled down after the public comments period, where 3,200 stakeholders submitted written testimony. This first list of products is valued at $34 billion and will be subject to import taxes as of July 6.
- The U.S. also proposed to impose tariffs on 284 new product lines which benefit from Chinese industrial policies, such as Made in China 2025, and are worth approximately $16 billion in imports. These products must undergo public notice and comments in the next weeks before the taxes are scheduled to enter effect.
The tariffs against China have been on the horizon since at least March, and although they will only officially begin as of July, supply chains have already begun to feel the effect.
Over the past five years, U.S. businesses have been sourcing more products from alternative suppliers, such as Vietnam. As one of the world's fastest growing economies located along many of the world's main shipping routes, the Southeast Asian nation is an attractive solution to avoid paying a 25% tariff. Imports from the country are expected to rise to $51 billion in 2018, compared to the $46 billion recorded last year.
But not all supply chains will be able to avoid the tariffs.
The new taxes are being placed on such a wide range of products — from nuclear reactor parts to molding patterns — that production may not easily be substituted.
When tariffs on steel were announced by the U.S., manufacturers in Chicago said they expected to pass about half of the rising costs on to customers. When taxes were placed on solar imports, small businesses worried they would be unable to bear the additional costs.
Some economists argue the long-term impacts of tariffs are minimal. The USTR said the new tariffs are in the interest of national security and are not placed on goods "commonly purchased by American consumers such as cellular telephones or televisions."
But all supply chains have parts, many of which are based in China, and will have to adjust their networks or cost calculations decisively as a result of these new tariffs.
It's not just importers that will suffer. U.S. exporters may soon face tariffs of the same scale on their own products.
"China has to respond strongly and firmly defend the interests of the country and the people, and resolutely safeguard economic globalization and the multilateral trading system," China's Commerce Ministry said in a statement, made public by CNBC's Eunice Yoon on Twitter.
"We will immediately introduce taxation measures of the same scale and the same strength. All the economic and trade achievements previously reached by the two parties will no longer be valid at the same time," the ministry said, calling on all countries to take "joint actions" against the U.S.