US Hits China With Tariffs, Investment Scrutiny
The Trump administration has announced a new 25% tariff on certain Chinese products and directed CFIUS to tighten scrutiny of Chinese investment in sensitive US technology.
Following a Section 301 investigation into China's technology transfer and intellectual property practices, the White House on March 22, 2018, directed multiple agencies to take action. The U.S. Trade Representative (USTR) will impose an additional 25% ad valorem tariff on a list of Chinese products, set to include aerospace, information and communication technology, and machinery. The USTR will also pursue a case against China's licensing practices at the World Trade Organization. This development is critical for counsel advising clients with Chinese supply chains, as the tariffs will significantly raise import costs. Furthermore, the memorandum directs the Committee on Foreign Investment in the United States (CFIUS) to address Chinese investment aimed at acquiring sensitive U.S. technologies, signaling a more challenging environment for inbound M&A. Affected importers should monitor the Federal Register for the finalized product list and prepare to substantiate country-of-origin claims for goods with multinational production histories.