Trade Relations are Building a Bigger Wall Between US & China

Trade Imbalance

On Tuesday, April 3rd, the US Trade Representative (USTR) issued a list of over 1,300 products that when imported from China, would carry an additional 25 percent duty.

The action doesn’t come as a surprise as both nations have been at odds over President Trump’s open position on the trade imbalance.

This new import tax is intended to harshly penalize Chinese manufacturers for alleged intellectual property (IP) theft, following a US investigation based on Section 301 of the Trade Act of 1974.

The results determined that US companies operating in China are at a disadvantage since they are forced to enter joint ventures with Chinese companies and/or share their technology.

This leads to Chinese firms using proprietary patents and software from US companies.

The targeted list of products includes industries such as aerospace, machinery, robotics, and information and communication technology.

The USTR explained that the list of products determined from the Section 301 investigation is based “on extensive interagency economic analysis and would target products that benefit from China’s industrial plans while minimizing the impact on the U.S. economy.”

For a full list of the products and tariffs, click here. China responded overnight with retaliatory tariffs on US exports, including soybeans, automobiles, and chemicals. The counter-move imposes a 25 percent tariff on 106 categories of US products, including machinery, car and aircraft parts, televisions, steel, and more.

Importers will have time to adjust to any changes as they will not go into effect immediately. The USTR will hold a 30-day period of public comments and hearings before action will take place.

These and other trade policy shifts are disruptive to global supply chains and to the businesses and consumers depending on them. Regulatory modifications require companies to be keyed into new or altered trade sanctions, export license requirements, customs documentation, tax and duty codes, and stacks of legal mumbo-jumbo.

Companies engaged in global trade must manage a tremendous amount of information to establish and maintain compliance with regulations. This information – also referred to as trade content – ranges from the harmonized tariff schedules (HS) for product classification, to the duty rates needed to calculate landed cost, to the controls that determine what is required for a transaction to be legally completed. In order to efficiently import or export goods, shippers need fast access to data for all the countries where they trade.

Unfortunately, collecting, cleansing, and publishing trade content is a complicated task; which becomes even more challenging when considering the number of countries, number of government agencies, differences in trade regimes, and the ever-changing trade position of each country in the supply chain.

Many companies lack the personnel and expertise to monitor trade compliance and manage supply chains. Amber Road provides the industry’s most comprehensive database of trade content including government regulations and international business rules, called Global Knowledge®.

It powers the Global Trade Management software suite by fully supporting import, export, and logistics processes with the most current data available anywhere.

Related: A Day of Action Sets the Tone for Future Trade

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