© [2019], Sandler, Travis & Rosenberg, P.A. Originally published in the [05/06/2019] issue of the Sandler, Travis & Rosenberg Trade Report. Reprinted by permission. 

On Sunday, May 5, 2019, President Trump issued two tweets threatening to increase the current 10% tariff on $200 billion in Chinese imports to 25% effective on Friday May 10. He further threatened to impose a 25% tariff on all remaining imports from China. Importers should quickly evaluate exposure and seek ways to mitigate the impact of these potential new tariffs before they go into effect.

Specifically, the president stated:

“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%.  The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”

It is important to recall that the Chinese delegation will be arriving in Washington, D.C. this week for more consultations.  It is possible that these tweets, issued on a Sunday when the markets are closed, were intended to provide additional negotiating leverage for USTR Lighthizer and Secretary Mnuchin.  The response of the markets during the week may have an impact on the potential imposition of these tariffs.

Regardless, if the tweets are made policy (which will require an official communication from the White House) tariffs could increase from 10% to 25% effective for goods imported on or after Friday May 10.  Also, if the President “soon” imposes 25% tariffs on all remaining goods from China, they will include many consumer goods such as apparel and footwear.