The World Trade Organization is set to rule on a dispute between the U.S. and China regarding the former’s section 301 tariffs on the latter by the end of June, Inside Trade reports. The section 301 tariffs, applied in four phases between July 2018 and September 2019, form the heart of the trade war between the two countries. 

As outlined in Panjiva’s research of April 3, the phase 1 trade deal between the two countries puts a hold on any new tariffs while cutting list 4A duties to 7.5% from 15.0%. Duties on the other three lists remain in place at 25% for the foreseeable future, and could be scrapped if the WTO rules against them. 

Sadly a conclusion is unlikely to be reached or abided by given the WTO’s appellate body is inquorate and given the Trump administration’s antipathy toward the WTO.

Panjiva’s analysis shows that the section 301 duties have had the desired effect in cutting U.S. imports of the products covered from China. Imports of list 4A products fell by 38.4% year over year in February while list 1-3 fell by 27.0% year over year. Looking further back, imports of list 4A products in February were 42.8% lower than the same period of 2017 while list 1-3 products fell by 45.8%.

Chart segments U.S. imports from China by section 301 tariff list. Source: Panjiva

Arguably the most significant change would come from a reduction in list 3 tariffs. The rate, set initially at 10% in September 2018 and raised to 25% in May 2019, largely covers both components and finished electronics and furniture products in the consumer and business sector. 

The largest contributors to the 27.0% downturn in imports of list 3 products in the 12 months to Feb. 29 compared to 2017 were: a 75.6% slide in imports of computer circuit boards (HS 8473.30.11), Panjiva’s data shows; a 71.5% slump in shipments of all-in-one computer systems (HS 8471.50.01); and a 36.5% dip in imports of certain types wooden furniture (HS 9403.60.80).

More recently the electronics imports have run into disruptions caused by factory closures in China related to the coronavirus pandemic. Panjiva’s U.S. seaborne import data shows that shipments of computer circuit boards from China fell by 59.2% year over year in March, while shipments from Taiwan declined by 9.8% and those from the rest of the world improved by 24.9%.

Leading importers from China in 2019 that may benefit from a cut in tariffs include Hon Hai with 3,288 TEUs of shipments linked to the firm followed by Wistron with 1,280 TEUs and HP with 674 TEUs.

Chart segments U.S. seaborne imports of circuit boards for computers by origin on a monthly and three-month average basis. Source: Panjiva