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The Biden administration officially imposed steep tariffs on a number of Chinese goods on Sept. 27 that impact U.S. imports of electric vehicles, solar cells, steel, aluminum, and more.

The Office of the U.S. Trade Representative had previously issued a notice seeking comments on (1) whether hundreds of specified subheadings under Chapters 84 and 85 of the HTSUS (covering certain machinery used in domestic manufacturing) should be eligible for temporary exclusion from the section 301 tariffs and (2) whether products classified in Chapters 84 and 85 that are not on USTR’s list should be eligible for exclusions as well. USTR then issued a separate notice setting forth the information it planned to require from those requesting tariff exclusions for goods deemed eligible. That information includes 10-digit HTSUS numbers, detailed product descriptions, and product availability in the U.S. and third countries. 

China is the fourth largest export market and the largest source of imports for Virginia companies. There will likely be extensive trade retaliation measures by China on U.S. goods in the following months. For more information, click here.

On Aug. 23, the U.S. Department of Commerce announced its list of critical sectors and key goods for potential cooperation under the Indo-Pacific Economic Framework Supply Chain Agreement. Sectors include agriculture, chemicals, consumer goods, critical minerals and mining, energy and environmental industries, health industries, information and communication technology, and transportation and logistics.

Sectors and goods notified by the U.S. and other IPEF parties may ultimately be selected as the subject of action plans to identify shared vulnerabilities and opportunities to build supply chain resilience, but the DOC does not anticipate that all of the sectors and goods on its list will be selected, which will be decided by the IPEF Supply Chain Council. The DOC adds that this list can be updated as needed and that it continues to seek related input. For Virginia companies interested in the IPEF market, VEDP will be attending a trade mission to Vietnam and Indonesia on November 18. For more information, click here.

USTR reports that during the fifth round of meetings under the U.S.-Japan Partnership on Trade, held July 29-30 in Washington, officials discussed the following issues: third-party digital economy regulations that present concerns, commitments under the U.S.-Japan Critical Minerals Agreement, and non-market policies and practices of third countries that have resulted in existing and rapidly emerging excess capacity in several sectors and could increase vulnerability to economic coercion. These discussions will likely not affect tariff rates in the near future for Virginia companies, but it will be important to monitor for companies in the digital trade space. For more information, click here.

Senior officials from the U.S. and the Philippines met on July 30 in Manila under the 2+2 Ministerial Dialogue, where officials committed to continued work on (1) identifying this year projects for investment along the Luzon Economic Corridor, with a focus on critical transportation infrastructure in ports and rail and clean energy deployments to bolster the semiconductor industry, (2) creating more resilient, secure, and sustainable global value chains in critical sectors (including semiconductors), and (3) critical minerals processing. The Philippines are hoping for more access to the U.S. market in the critical mineral supply chain. The Philippines is currently a top 50 export and import destination for Virginia companies. For more information, click here.

The Department of Commerce reports that at the second ministerial meeting under the U.S.-Korea Supply Chain and Commercial Dialogue, held June 27 in Washington, D.C., senior officials noted “significant, substantive progress” being made by working groups on advanced manufacturing and supply chain resilience, dual-use export controls, healthcare and healthcare technologies, and the digital economy. 

In particular, they highlighted recent activities illustrating deeper bilateral cooperation on semiconductor investment, agreed to continue collaboration on export controls to address national security threats while minimizing supply chain disruption, discussed cooperating on digital standards-related activities and industrial artificial intelligence, and committed to exploring opportunities for collaboration in third countries where governments are seeking to increase their access to investment and global markets. These talks are unlikely to impact tariffs between the U.S. and Korea, but could still be important for improved trade between the two nations. For more information, click here.

The third meeting of the U.S.-Maldives Trade and Investment Framework Agreement Council was held July 12 in Washington. The two sides highlighted progress on issues related to the protection and enforcement of intellectual property, noted the importance of providing regulatory transparency to enhance the investment climate, and committed to increase cooperation on worker rights, digital trade, and environmental sustainability. The Maldives emphasized its support for digital content creators, artists, and entrepreneurs to capitalize on global commercial platforms and payment system solutions, and it highlighted investment opportunities in the financial, maritime, real estate, and tourism sectors. The U.S. congratulated the Maldives on implementing a majority of its commitments under the World Trade Organization’s Agreement on Trade Facilitation and encouraged working with donors on the implementation of the outstanding provisions. For more information, click here.

At the Fifth U.S.-Sri Lanka Partnership Dialogue held July 12 in Washington, officials reiterated their intent to explore new opportunities to enhance market access, bilateral trade, investment, and tourism. Current initiatives include a $553 million commitment from the U.S. International Development Finance Corporation to support the development of the West Container Terminal at the Port of Colombo and a forthcoming five-year activity by the U.S. Agency for International Development to foster inclusive and sustainable agriculture-led economic growth in Sri Lanka. Sir Lanka is a small market for Virginia companies, but these negotiations could still yield additional market access in the small trading partner. For more information, click here.

The State Department reports that the seventh high-level meeting of the U.S.-EU Dialogue on China and the sixth meeting of the U.S.-EU High-Level Consultations on the Indo-Pacific were held Sept. 9-10.

With respect to China, senior officials “reiterated deep and increasing concern” about China’s exports of significant amounts of dual-use goods and items used by Russia on the battlefield against Ukraine as well as China-based companies’ continued involvement in sanctions evasion and circumvention. The two sides also “confirmed their intention to continue de-risking” by investing in their resilience and reducing dependencies and vulnerabilities in strategic sectors. The European Union is the largest export destination for Virginia companies, making these strategic conversations even more important to monitor. For more information, click here.

At the first in-person trade ministers meeting under the Americas Partnership for Economic Prosperity on August 1, ministers announced that they had (1) established new committees dedicated to trade and labor and trade and environment and (2) adopted a declaration on good practices for pre-arrival processing that lays out specific goals to more effectively implement the World Trade Organization Trade Facilitation Agreement. 

Ministers also directed senior officials to take additional actions, including convening a meeting to share best practices for inclusive trade and develop a program to share each APEP country’s regulatory agenda for key sectors. USTR Katherine Tai said work under the APEP trade track “has truly begun, and we are making real progress” on issues like labor standards, trade facilitation, and tackling the climate crisis. For Virginia companies interested in APEP, VEDP will be attending a Trade Mission to Mexico on October 7. For more information on the trade show, click here. 

The U.S. has requested dispute settlement consultations under the U.S.-Mexico-Canada Agreement regarding Canada’s digital service tax. DSTs are taxes on revenues generated from providing digital services to, or aimed at, users in the subject jurisdiction. 

Several years ago, the Office of the U.S. Trade Representative conducted Section 301 investigations into DSTs proposed or implemented by a number of trading partners and found that DSTs in six countries would discriminate against U.S. companies, be inconsistent with prevailing principles of international taxation, and burden or restrict U.S. commerce. In response, USTR proposed additional tariffs of up to 25 percent on $880 million worth of goods imported from these countries, but it subsequently terminated that action to give the Organization for Economic Cooperation and Development time to negotiate a multilateral agreement on international taxation, including DSTs.

However, as those talks have dragged on, Canada unilaterally implemented a DST of its own. According to USTR, this measure imposes a three percent tax on revenues relating to online marketplaces, online targeted advertising, social media platforms, and user data. It applies to companies or groups with annual global revenues of €750 million or more and Canadian digital services revenue of more than CA$20 million. The DST is retroactive to Jan. 1, 2022, and companies will start paying it on June 30, 2025. So far in 2024, Canada has been the second largest export market and third largest source of imports for Virginia companies. This trade dispute could lead to higher taxes or tariffs on products or services crossing the U.S.-Canada border. For more information, click here.

On August 22, the U.S. Department of State announced that the U.S. and Argentina signed a memorandum of understanding to strengthen cooperation on critical mineral supply chains and to promote trade and investment in critical mineral resource exploration, extraction, processing, refining, recycling, and recovery. The MOU sets the direction for further collaboration in critical mineral resource sector governance, investment, and global supply chain security. These negotiations are unlikely to affect tariffs for Virginia companies, but they could make it easier for companies active in the critical mineral supply chain to do business there. For more information, click here.

USTR has tabled proposed text on inclusivity in the negotiations on a U.S.-Kenya Strategic Trade and Investment Partnership. According to USTR, the proposed text commits the two sides to develop and implement cooperative activities to address the barriers faced by traditionally underserved communities to accessing international trade and investment opportunities (e.g., engaging these communities to better understand those challenges as well as collecting and exchanging data, information, experience, and evidence related to a range of relevant initiatives, programs, and policies). The proposed text also includes an article on responsible business conduct that aims to improve cooperation on this issue, including by encouraging enterprises to adopt and implement voluntary best practices of responsible conduct. 

The eighth round of negotiations on the U.S.-Kenya Strategic Trade and Investment Partnership was held Sept. 16-27 in Washington, D.C. According to the Office of the U.S. Trade Representative, this round will primarily cover agriculture; customs, trade facilitation, and enforcement; environment; good regulatory practices, inclusivity; legal and administrative matters; and workers’ rights and protections. The two sides have said they are working to conclude an agreement by the end of this year. Kenya is currently a small market for Virginia companies, but these negotiations could make the business environment easier in Kenya. For more information, click here.

The ninth round of the U.S.-Romania Strategic Dialogue, held June 21 in Washington, D.C., included sessions on trade and investment as well as security and defense cooperation, Black Sea security, energy security and interconnectivity, and other topics. However, a State Department readout of the meeting said only that bilateral trade and investment “has expanded significantly” and that the two sides “pledged to build on these developments in order to develop our economic cooperation to its full potential.” VEDP staff will be attending the upcoming U.S. Army’s Annual Meeting on October 14 in Washington, D.C. Virginia companies that are interested in the event can find more information here.

U.S. Customs and Border Protection has announced plans to accelerate testing and adoption of global interoperability standards as part of an effort to modernize the Automated Commercial Environment.

Interoperability is the ability of different computer systems and software to communicate with each other and that interoperability standards are detailed guidelines for software development that enable different systems to connect and exchange data. CBP states that these standards will increase supply chain transparency and set the stage for faster, more secure data sharing by enabling federal agencies to safely exchange data with traditional and non-traditional trade entities worldwide in near real-time. CBP believes better quality data earlier in the import process will lead to speedier admissibility determinations and the ability to focus more resources on identifying and acting on non-compliant goods and entities. Virginia companies involved in international trade should monitor these developments closely and are encouraged to reach out to their VEDP trade manager should any questions arise. For more information, click here.

U.S. Customs and Border Protection is currently conducting a test in which Section 321 shipments may be entered via informal entry type 86 in the Automated Commercial Environment. Section 321 of the Tariff Act of 1930 allows for the informal entry of articles that have a retail value of $800 or less and are imported by one person in one day. These de minimis shipments are free of duty and taxes and are subject to expedited clearance processing.

The CPB test is open to all owners, purchasers, consignees, and designated customs brokers of Section 321 shipments, including those subject to partner government agency requirements, imported by all modes of cargo transportation except mail. However, it is not available for goods subject to antidumping or countervailing duties, goods subject to quota, certain tobacco and alcohol products, and goods taxed under the Internal Revenue Code.

CBP recently announced that on July 25 it began requiring the estimated date of arrival for all entry type 86 submissions. To enforce this requirement ACE deployed an update to cargo release processing under which these submissions must include the reference identifier qualifier code “EDA” in the SE20 record and the value of this identifier must be the estimated date of arrival (reported as MMDDYY). Failure to provide this information will result in the entry being rejected. Virginia companies that import under the de minimis threshold should monitor these developments very carefully. For more information, click here.

The State Department has issued an interim final rule that, effective Sept. 1, amends the International Traffic in Arms Regulations to facilitate secure, license-free defense trade between the U.S., the United Kingdom, and Australia. This rule follows State’s determination that the export control systems of the UK and Australia are comparable to those of the U.S. and that those countries have implemented a reciprocal export exemption for U.S. entities. Comments on this rule are due no later than Nov. 18.

This rule provides that no license or other approval from State’s Directorate of Defense Trade Controls is required for the export, reexport, retransfer, or temporary import of defense articles; the performance of defense services; or engagement in brokering activities between or among a specific list of authorized users within these three countries. The vast majority of defense articles and services described on the U.S. Munitions List will be eligible for this exemption; those that aren’t are identified in an excluded technology list. Virginia companies engaged in defense trade should review this interim final rule to ensure they remain in compliance. For more information, click here.

The Department of State has issued a final rule that, effective Sept. 16, will add two new entries to the International Traffic in Arms Regulations to expand the definition of activities that are not exports, reexports, retransfers, or temporary imports and therefore do not require authorization from State’s Directorate of Defense Trade Controls.

First, subject to certain conditions, the taking of defense articles outside a previously approved country by the armed forces of a foreign government or United Nations military personnel on a deployment or training exercise is not an export, reexport, retransfer, or temporary import provided (1) there is no change in end-use or end-user, (2) the article is transported by and remains in the possession of the previously authorized entities, and (3) the article is not being exported from or temporarily imported into the U.S.

Second, a foreign defense article that enters the U.S. either permanently or temporarily and is subsequently exported from the U.S. pursuant to a license or other approval is not subject to reexport and retransfer requirements provided the article (1) has not been modified, enhanced, upgraded, or otherwise altered or improved, (2) has not had a U.S.-origin defense article incorporated into it, and (3) is not being exported from or temporarily imported into the U.S. For more information, click here.

The Bureau of Industry and Security has issued a final rule that, effective July 23, expands controls on shipments of certain foreign-produced items located in or destined to Iran. BIS states that it has made these changes in an effort to further impede Iran’s ability to procure technology and components critical for military systems, including advanced drones that pose threats to U.S. forces and allies.

The rule expands the scope of the Export Administration Regulations’ Iran foreign direct product rule by requiring a license for the export, reexport, and transfer (in-country) of additional foreign-produced items located in or destined to Iran. It also adds a new end-user scope that targets transactions involving such items in which the government of Iran is known to be a party; e.g., as a purchaser, intermediate consignee, ultimate consignee, or end-user.

Shipments of items removed from license exception eligibility or eligibility for export, reexport or transfer (in-country) without a license as a result of this rule that were on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on July 26 pursuant to actual orders for export, reexport, or transfer to a foreign destination may proceed to that destination under the previous license exception eligibility or without a license so long as they have been exported, reexported, or transferred before Aug. 26. Any such items not actually exported, reexported, or transferred before midnight on Aug. 26 will require a license in accordance with this rule. For more information, click here.

President Biden has issued two proclamations aimed at preventing China and other countries from evading Section 232 tariffs on steel and aluminum by transhipping such goods through Mexico. This change “would impact small volumes of existing shipments,” a Bloomberg article said, “but is meant to deter what could otherwise be a forthcoming spike.”

Under one proclamation, a Section 232 tariff of likely 25 percent will be imposed on steel and steel derivative articles imported from Mexico if the steel is melted and poured in a country other than the U.S., Canada, or Mexico. Similarly, the other proclamation imposes a Section 232 tariff on aluminum and derivative aluminum articles imported from Mexico if the country of primary smelt, secondary smelt, or most recent cast of the aluminum is China, Russia, Belarus, or Iran. If such country is China, Belarus, or Iran, this tariff will likely be 10 percent; if it is Russia, the tariff will be 200 percent. For more information, click here.