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Possible exclusion from 15% 301 tariffs for Chinese pianos #2902882
10/21/19 04:58 PM
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On Friday the United States Trade Representative (USTR) announced the opening of a petition/exemption request process for "List 4A" Chinese goods, including Heading 9201 acoustic pianos, Heading 9207 digital pianos, and Heading 9209 piano parts, all of which are currently subject to 15% Section 301 tariffs. Anybody interested in knowing more? If so, let me know in the thread or private message.

Larry.

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Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2902909
10/21/19 06:37 PM
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I am not in the US, so I am not familiar with the details of this. I would be interested in knowing more. Are Section 301 tariffs among those introduced by Trump?

Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: David-G] #2902926
10/21/19 07:47 PM
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Yes. These particular Section 301 tariffs (because there are others, on different products, with different countries) are the tariffs that President Trump and his administration have been using on Chinese imports to apply trade pressure on China. They've been being applied in stages, going back to "List 1" in July 2018. This latest list of affected tariff classifications ("List 4A") went into effect on September 1, 2019. "List 4B" has been announced, but isn't scheduled to go into effect until December 2019. The China Section 301 tariff rates range from 15% to 25%, and are in addition to the ordinary duties that may also apply to any given imported product. For example, the ordinary duty rate on Chinese acoustic upright pianos is 4.7%, and the 15% Section 301 tariff is on top of that.

Larry.

Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2902932
10/21/19 08:04 PM
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I think you answered this in a different thread, but I can't remember the answer. What defines a piano being Chinese? Does it have to be 100% manufactured there, or just assembled there, does it matter where the parts were manufactured, etc. thanks


Yamaha P90, Kawai GL-10
Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: MarkL] #2902935
10/21/19 08:25 PM
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Originally Posted by MarkL

I think you answered this in a different thread, but I can't remember the answer. What defines a piano being Chinese? Does it have to be 100% manufactured there, or just assembled there, does it matter where the parts were manufactured, etc. thanks


It has to be "substantially transformed into a new and different article of commerce" there. So, for example, even if all of the lumber were imported into China, where it was then "substantially transformed" into a piano, the piano would be considered Chinese.

It works the other way too. Say, for example, that all of the finished components are made in China, but final assembly of them into a finished piano takes place in Indonesia. There's a fair probability that U.S. Customs and Border Protection would say that it was already an "unassembled piano" when it left China, and thus the Indonesian assembly was not a "substantial transformation." So you could be importing finished pianos from Indonesia when CBP comes knocking looking for their China Section 301 tariffs!

Larry.

Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2902943
10/21/19 09:22 PM
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Hi Larry
When will the petition/exemption request process be decided? And who is involved in the petition? I would hope it would be a wide segment of the musical community.... is this petition being widely circulated?


"Music, rich, full of feeling, not soulless, is like a crystal on which the sun falls and brings forth from it a whole rainbow" - F. Chopin
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Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2903000
10/22/19 06:34 AM
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Thanks for the updates. I am interested in knowing more.


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Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2903012
10/22/19 07:39 AM
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Thanks Larry, great explanation.


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Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2903020
10/22/19 08:21 AM
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Hi Larry,
Thank you for keeping us up to date on this issue. Since I’m not in business anymore and never owned a piano store, perhaps I’m less concerned about trade negotiations than I really should be. Above taxes, duties, there are currency exchange rates, overall labor rates, and the exporting company’s overall financial health that play a part in the final product’s price to foreign buyers. I also think that trade between China and the US is a BIG DEAL to both countries so there’s “skin in the game” for both sides. I feel confident that the two sides will reach an agreement down the road.


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Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: dogperson] #2903033
10/22/19 09:13 AM
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Originally Posted by dogperson

When will the petition/exemption request process be decided? And who is involved in the petition? I would hope it would be a wide segment of the musical community.... is this petition being widely circulated?


The window for filing petitions (i.e. requests for exclusion from the 15% Section 301 tariffs) will open on October 31, 2019 and close January 31, 2020. I expect that decisions to individual requests will start coming out of the Office of the United States Trade Representative (USTR) in late November or early December. All requests that are granted would be retroactive to September 1, 2019 (when the Section 301 tariffs on "List 4A" goods went into effect).

Each exclusion request must be narrowly focused. 151 cm grand pianos, for example, would have to be on a different exclusion request than 161 cm grand pianos. Uprights are also similarly distinguished by size; tuning pins would have to be on their own exclusion request, etc., etc. And narrowly focused requests can be a good thing. A domestic producer, for example, might have strong objections to an exclusion for Chinese plates, but no concern at all about Chinese action parts.

And there's no limit to the number of exclusion requests that anyone can file. In the "List 3" exclusion request that recently concluded, individual companies often filed dozens of separate requests, some of which might be granted and some denied.

Once an exclusion request is filed, there is a 14-day window for others to file comments to it, either in support of, or opposition to, the exclusion request, and the original requester then has 7 days to reply.

Who gets involved? Everybody from importers to domestic manufacturers, to consumers, to trade groups, to politicians, to crackpots. Are the requests widely circulated? They will hide in plain sight on the internet once the USTR's portal opens for their filing.

Larry.

Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2903068
10/22/19 10:14 AM
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Very interesting post!! Thanks, Larry. Earlier you posted the newly signed US-Japan free trade agreement with tariffs on acoustic pianos from Japan being phased out in two years. Together with this new Section 301 tariffs on Chinese pianos, we should expect the Japanese pianos to capture a larger market shares in the US. Right?

Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2903138
10/22/19 01:48 PM
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Also something to think about with any tariff is that it gets charged against the "cost" of the piano and not the retail or final sales price. Don't let dealers try to take advantage of the situation and end up making more




Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: Miguel Rey] #2903145
10/22/19 01:54 PM
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Originally Posted by Miguel Rey
Also something to think about with any tariff is that it gets charged against the "cost" of the piano and not the retail or final sales price. Don't let dealers try to take advantage of the situation and end up making more


Since the tariff is charged against the cost of the piano, aren’t dealers paying more for their inventory of pianos and parts? The only way this would be a false statement is if the manufacturer absorbed the entire tariff cost... not likely to happen IMHO


"Music, rich, full of feeling, not soulless, is like a crystal on which the sun falls and brings forth from it a whole rainbow" - F. Chopin
" I never dreamt with my own two hands I could touch the sky" - Sappho

It’s ok to be a Work In Progress
Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: Apoll0] #2903437
10/23/19 12:15 AM
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Originally Posted by Apoll0
Very interesting post!! Thanks, Larry. Earlier you posted the newly signed US-Japan free trade agreement with tariffs on acoustic pianos from Japan being phased out in two years. Together with this new Section 301 tariffs on Chinese pianos, we should expect the Japanese pianos to capture a larger market shares in the US. Right?

If the price differential decreases, then more on-the-fence buyers would be likely to choose them.



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Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2903503
10/23/19 07:07 AM
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I am not sure if this is general knowledge, but Young Chang began as a small assembly facility of Yamaha parts. They were Yamaha piano dealers, but to avoid a huge luxury tax, the pianos were shipped to them in parts and assembled in Korea.


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Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: iLaw] #2903518
10/23/19 07:52 AM
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I was wondering if this is true? That the Chinese can cheat by using various name brands and keeping the number of pianos under that name brand under a certain number to avoid excessive tariffs. If so, is that ever looked at. If not who could you call?
-chris


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Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: Rich Galassini] #2903580
10/23/19 09:54 AM
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Originally Posted by Rich Galassini
I am not sure if this is general knowledge, but Young Chang began as a small assembly facility of Yamaha parts. They were Yamaha piano dealers, but to avoid a huge luxury tax, the pianos were shipped to them in parts and assembled in Korea.


I didn’t know that about Young Chang, thank you. One thing I do know, there are always loopholes for taxes including tariffs. Importers and Exporters have been playing this game long before The Boston Tea Party. A large Chinese company backed by the Chinese government could easily buy or lease a factory site in either Japan or Korea and produce pianos for the US market. I’m just making WA guesses here but I doubt the Chinese piano market to the US is a big deal to China. I think clothing, appliances, devices and electronic parts are the bigger concerns. My 2 cents


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Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: Chernobieff Piano] #2903672
10/23/19 01:12 PM
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Originally Posted by Chernobieff Piano

I was wondering if this is true? That the Chinese can cheat by using various name brands and keeping the number of pianos under that name brand under a certain number to avoid excessive tariffs. If so, is that ever looked at. If not who could you call?


There are strategies being employed to legally avoid the China 301 tariffs, as well as schemes to illegally evade the tariffs. Using multiple brand names, and keeping the numbers per brand low, however, wouldn't really work in this circumstance because (a) there isn't a de minimis number that would be relevant or useful for commercial piano imports below which you don't have to pay the tariffs, and (b) Customs and Border Protection (CBP) doesn't really look for or care about the brand name in this case. The tariff is assessed based on the country of origin and the eight-digit tariff classification, both of which have to be shown (correctly!) on the formal entry documents. Putting an incorrect tariff classification or country of origin on the entry documents to evade the Section 301 duties would surely be considered fraud if/when spotted by CBP.

Who could you call if you thought you had information concerning evasion? CBP is in full investigation and enforcement mode now against illegal evasion schemes, and they love whistleblowers.

Larry.

Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: j&j] #2903674
10/23/19 01:18 PM
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Originally Posted by j&j

A large Chinese company backed by the Chinese government could easily buy or lease a factory site in either Japan or Korea and produce pianos for the US market.


Yes indeed. Some might jokingly refer to China Section 301 as "The Vietnam Full Employment Act."

Larry.

Re: Possible exclusion from 15% 301 tariffs for Chinese pianos [Re: dogperson] #2903810
10/23/19 07:42 PM
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Originally Posted by dogperson
Originally Posted by Miguel Rey
Also something to think about with any tariff is that it gets charged against the "cost" of the piano and not the retail or final sales price. Don't let dealers try to take advantage of the situation and end up making more


Since the tariff is charged against the cost of the piano, aren’t dealers paying more for their inventory of pianos and parts? The only way this would be a false statement is if the manufacturer absorbed the entire tariff cost... not likely to happen IMHO


Yes they are paying more using the "cost" as the basis. I'm just saying that people should be aware if a dealer tries to pass the full % rate of the tariff using the sales prices as the basis and not their cost.




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