U.S. extends some China tariff exclusions only through year end

WASHINGTON (Reuters) - The U.S. Trade Representative’s office said on Tuesday it has extended China tariff exclusions for a wide range of goods, including smart watches and certain medical masks, through the end of 2020, rather than renewing the previous one-year extensions.

The extension of only four months would likely maintain some leverage over China’s implementation of a Phase 1 trade deal, but would increase uncertainty for importers of products ranging from Bluetooth devices to upright pianos.

In a Federal Register notice here, USTR said the extensions applied to products excluded from "Section 301" tariffs imposed by President Donald Trump a year ago on a range of Chinese consumer goods amid tense trade negotiations between the world's two largest economies. The tariffs on some $125 billion worth of goods were set at 15%, then lowered to 7.5% by the Phase 1 deal signed in January.

The products included a number of Bluetooth and wearable data-transmitting devices, such as those imported from China by Apple Inc AAPL.O, FitBit FIT.N, Sonos SONO.O and other technology companies.

Also on the list of extended exclusions were a number of face masks, respirators and other medical products, including stethoscope covers, cotton gauze sponges and blood pressure cuff sleeves. Products ranging from upright pianos to liquid crystal display modules and stainless steel watch cases also were excluded until year-end.

USTR had previously granted one-year exclusions from the tariffs. The Federal Register notice did not indicate a specific reason for extending the exclusions for only four months, but the Trump administration has threatened to raise tariffs should China fail to implement the Phase 1 agreement launched in February.

A USTR spokesman could not immediately be reached for further comment.

While U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He reaffirmed their commitment to the deal last week, China’s purchases of U.S. goods and services are well behind the pace needed to meet first year targets of a $77 billion increase over 2017 levels.

“The U.S. Trade Representative will take account of the cumulative effect of exclusions in considering the possible further extension of the exclusions covered by this notice, as well as possible extensions of exclusions of other products covered by the action in this investigation,” the agency said.

Reporting by David Lawder; Editing by Chizu Nomiyama and David Gregorio