The US and China signed the Phase One trade deal on January 15th. The deal will reduce some Section 301 duties on Chinese imports, and China will reciprocate with increased imports of American goods.

Section 301 duties on 3,800 8-digit tariff lines (from the $300 billion [List 4a] trade action) will decrease from 15% to 7.5% for goods entered on or after 12:01am on February 14, 2020. The remaining Section 301 tariffs will stay in place until phase two of the trade deal is reached. A start date for continued phase two negotiations is unclear, but various sources have indicated it would happen soon after the Phase One implementation.

China agreed to increased imports of American goods and services by $200 billion over the next two years with a continued trajectory after 2021. They will make purchases in US manufactured goods, agriculture, energy, and services. The agreement is “fully enforceable” and includes a “strong dispute resolution system to ensure effective implementation and enforcement.” Additionally, the Chinese government will address intellectual property concerns, commit to currency devaluation changes, and end its “practice of forcing foreign companies to transfer their technology to Chinese companies in order to gain market access.”

To avoid Section 301 duties, importers may want to consider the February 14th implementation date and schedule shipments accordingly when possible. A delay may also help importers of Chinese goods avoid the backlog that often results from Chinese New Year. To view the text of the agreement and fact sheets about the agreement, please visit the website of the US Trade Representative. Deringer will continue to monitor the implementation of the Phase One trade deal. If you have specific questions about Section 301 or Phase One, please contact Deringer’s Compliance Department.