The US Commerce Department has announced that it will be imposing tariffs on Chinese twist ties, usually used to seal bread bags and tie up cables.
The Commerce Department decided to place tariffs on these twist ties because China has been unfairly subsidizing twist ties, putting US producers at a disadvantage.
Chinese Twist ties and local producers
This is the first time the department decided to impose tariffs on a product to lessen the impact of the Chinese currency. According to the department, China's undervalued currency allows consumer to purchase Chinese twist ties cheaper, undermining local producers.
In a statement, Commerce Secretary Wilbur Ross said: "The Department of Commerce will continue to use the legal tools at our disposal to aggressively counter currency undervaluation and other unfair subsidies, further ensuring a level playing field for American businesses and workers."
The decision of the department follows a complaint filed by Worthington, Minnesota-based Bedford Industries, which primarily manufactures twist ties for packaging or resealing baked goods, coffee and vegetables.
Bedford argued in a blog post that the increasing market share of Chinese manufacturers would have been "unobtainable through fair competition".
The new tariffs comes amidst the transition from President Donald Trump to President-elect Joe Biden. Under President Trump, the US has been engaged in a trade war with China, increasing tariffs and restricting Chinese technology companies over national security concerns.
According to the Department of Commerce, it has launched 306 new investigations under Trump, indicating a 283% increase compared with the Obama administration.
Meanwhile last June, China announced that it will cut additional tariffs on $75 billion worth of US imports by half as the coronavirus outbreak escalates.
The decision to reduce the additional tariffs by 50%, which comes amidst the escalating coronavirus outbreak, will affect $75 billion worth of US goods that China imposed tariffs on last September.
China’s State Council Tariff Commission stated that it will cut the additional 10% tariff rate it previously imposed on some goods down to 5% while those that were taxed an extra 5% will now be levied 2.5%.
The commission also mentioned that other tariffs on US goods will remain while it continues to work on exemptions. In a statement, the commission said: "China hopes that both sides will abide by bilateral agreements and make an effort to implement relevant provisions so that we can boost market confidence, promote bilateral trade relations and global economic growth."
Undervalued Chinese currency
While imported twist ties from China only amounted to approximately $4.15 million last year and  $6.8 million in 2018, tariffs on the twist ties could set a precedent as the department took into account the value of the currency, which has only been permitted under its rules earlier this year.
The commerce department vowed to impose "countervailing" duties on Chinese twist ties in order to offset the government subsidies provided by China to Chinese exporters and producers.
The department claims that Chinese exporters are enjoying subsidies of 122.5% when the impact of "China's undervalued currency" is taken into account.
On the other hand, the US Treasury has removed its designation of China as a currency manipulator earlier this year. Currently, the Chinese yuan is at its highest value versus the US dollar since 2018.
The new duties will have to be approved by the US International Trade Commission before they are scheduled to be implemented in April.
