LINKEDINCOMMENTMORE

A new day, a new retaliatory list. On June 15, the U.S. released a list of products from China that would be subject to an additional 25 percent tariff as a result of the 301-probe related to intellectual property theft.

China wasted no time releasing a list of products from the U.S. that would also be subject to an additional 25 percent tariff in retaliation for the U.S. action. The retaliatory list released by China on Friday is version 2 of their 301 retaliation. Version 1, released in April, included 33 agricultural products. Version 2 includes all the original 33 ag products and adds 261 additional ag products. We explore the potential impact.

Version 1 of China’s 301 retaliation list caught a lot of attention when it was released due to the significant U.S. export value of the 33 products, which included soybeans, beef, cotton, corn, ethanol, dried distillers’ grains, grain sorghum, wheat, cranberries, orange juice, tobacco and whiskey, among others. According to Chinese import values, the Chinese imported $17.3 billion worth of these products each year from the United States over the 2015-2017 period.

The second version of 301 retaliation list, which includes 294 agricultural tariff lines, includes all of the initial 33 products, plus pork, poultry, rice, dairy products and a wide variety of fruits, vegetables and tree nuts. The average Chinese import value of these products from the United States over the 2015-2017 period was $19.9 billion each year. According to the same data, the average value of all Chinese imports of U.S. agricultural products (utilizing a World Trade Organization definition of agricultural goods) over the 2015-2017 period was nearly $22.9 billion, which means the new list covers nearly 90 percent of all U.S. agricultural exports to China.

It should also be noted that many of the products on the revised 301 retaliation list are also on China’s 232 retaliation list. As readers will recall, China’s 232 retaliation applies an additional 25 percent tariff on U.S. pork and coconut products and an additional 15 percent tariff on 86 products, including a wide variety of fruits, vegetables and nuts. It remains to be seen whether a product that is on both the 232 and the 301 tariff list will be subject to the combined tariff from both lists or simply the higher of the two. For example, in-shell almonds (HS 08021100) are on both lists. By virtue of being on the 232 list, U.S. almonds imported into China are subject to a 15 percent tariff (in addition to the standard 24 percent tariff). As of Friday, in-shell almonds are also on the 301 tariff list, which would make U.S. almonds subject to an additional 25 percent tariff (again in addition to the standard 24 percent tariff). So, will U.S. in-shell almonds imported into China after July 6 be subject to an additional tariff that is the higher of the two tariffs (25 percent) or the combined tariff that would result from being on both lists (40 percent)? Or would it be additive? Would the 15 percent tariff be applied and then the 25 percent tariff be applied to that value? Additional clarity from Chinese officials will be necessary to answer this question.

Read or Share this story: https://www.wisfarmer.com/story/opinion/editorials/2018/06/19/never-ending-retaliatory-tariff-exchange-china-edition/716698002/