With New 40% Tariff, Trump Takes Aim at U.S. Dependence on China's Factories
But on Thursday, Mr. Trump took aim at all indirect American imports, which he blames for part of the $1.2 trillion U.S. trade deficit. The president imposed 40 percent tariffs on so-called transshipments, which will take effect in a week. And a senior administration official who briefed reporters said work was underway that could broaden considerably the definition of indirect shipments.
The new rules cover indirect shipments from anywhere, not just China. But China, with its massive factory infrastructure and expansive manufacturing ambition, has been the main country to develop a global network for such shipments. Trade experts were quick to predict that China would be the most affected — and the most annoyed.
'The trade provisions are a thinly veiled attempt to box in China — China will view them as such, and this will inevitably spill over into trade discussions with the United States,' said Stephen Olson, a former American trade negotiator who is now a senior fellow at the ISEAS-Yusof Ishak Institute, a research group in Singapore.
Mr. Trump's executive order Thursday created a new category of imports: goods that are transshipped through other countries instead of coming straight from the country of origin. The 40 percent tariffs on these goods will be on top of whatever tariffs would have applied if the goods had come directly from the country where they were originally made.
The legal definition of transshipment is quite narrow: a good that did not undergo a 'substantial transformation' in the country through which it was indirectly shipped. Countries in Southeast Asia like Vietnam have long denied that they allow a lot of transshipment, and they have been tightening inspections to prevent it.
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