【Washington, 】Tariffs on Brazil to Increase But Rough Gemstones Exempt

Washington, D.C.—The Jewelers Vigilance Committee (JVC) issued a trade alert Friday afternoon regarding a new 25 percent tariff the Trump administration is imposing on imports from Brazil, effective this week.
The action followed a year-long study in which the administration determined that certain policies implemented by the Brazilian government are “unreasonable and burden or restrict U.S. commerce,” JVC stated in the alert.
Implemented under Section 301 of the Trade Act of 1974, the 25 percent tariff will be added onto the existing 10 percent tariff (which is set to expire on Friday), as well as any future tariffs.
It is set to go into effect at 12:01 a.m. EDT on Wednesday, though there are some exemptions.
The two tariff codes for what the industry would describe as rough gemstones—HTS 7103.10.20 and HTS 7103.10.40—are exempt, JVC President, CEO, and General Counsel Sara Yood said.

This means that rough gemstones exported from Brazil for cutting in, for example, India or Thailand, would not be taxed at the Brazilian rate. After cutting, they become products of the country where they are “substantially transformed,” i.e., cut and polished, and are taxed accordingly.
She said there are also exemptions for precious metals that are “pretty broad” and in line with previous policies. They include silver, gold, platinum, palladium, and rhodium in “unwrought” and “semi-manufactured” form.
However, Yood noted, the exemptions do not apply to polished gemstones or finished jewelry.

Tariff rates reached as high as 50 percent on some countries that are key links in the jewelry supply chain before the Supreme Court struck them down in February.

The Trump administration acted quickly to impose a new 10 percent tariff under Section 122 of the Trade Act of 1974, which allows the president to temporarily charge tariffs to “deal with large and serious United States balance-of-payments deficits.” The Section 122 tariffs are set to expire this coming Friday, July 24.
Immediately after the Supreme Court’s ruling in February, the Trump administration began an investigation under Section 301 of the 1974 Trade Act into labor practices in 60 countries.
In June, the Office of the United States Trade Representative (USTR) announced that it has determined that 54 of the 60 countries investigated have “failed to impose and effectively enforce a prohibition on the importation of goods produced with forced labor.”
The list of 54 countries includes India, China, Hong Kong, Israel, South Africa, Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, the United Kingdom, and Vietnam, as well as Brazil.
Goods imported from these countries will be taxed at 12.5 percent, known as the Section 301 tariffs or the “forced labor” tariffs.
The remaining six countries—Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan—have “failed to effectively enforce a prohibition on the importation of goods produced with forced labor,” USTR said. Goods imported from these countries will be taxed at 10 percent, though no official implementation date for the “forced labor” tariffs has been announced.

Yood pointed out that once the Section 301 tariffs are imposed, imports from Brazil will be taxed at a total of 37.5 percent: the recently announced 25 percent tariff, plus the 12.5 percent “forced labor” tariff.
Beginning Wednesday, imports from Brazil will be taxed at 35 percent—the 10 percent tariff imposed under Section 122 of the 1974 Trade Act that was implemented in February, plus an additional 25 percent tariff the Trump administration just announced.