UPDATE 1-U.S. Customs agency issues tariff increase notice, allows grace period

U.S. Customs and Border Protection said on Thursday it would begin collecting a 25 percent tariff on a $200 billion category of Chinese imports at 12:01 a.m. EDT (0401 GMT) on Friday, the final step toward activation of President Donald Trump's planned tariff increase. But a spokeswoman for the agency said the increase to 25 percent from 10 percent for over 5,700 product categories could still be stopped if the Trump administration orders a halt before midnight.

The guidance notice published on CBP's website also allows for a grace period for U.S-bound cargoes already in transit or departing in the next few hours. Affected goods cargoes that have left China before 12:01 a.m. EDT on Friday will be considered exported to the United States and subject to the lower, 10 percent duty rate, a CBP spokeswoman confirmed.

The grace period marks a shift from previous rounds of punitive tariffs under Trump's "Section 301" investigation into China's intellectual property practices. Prior tariffs were applied to all goods arriving after activation deadlines, but those tariffs, covering some $250 billion in goods, were imposed with about three weeks' notice. Trump announced the tariff hike to 25 percent on the $200 billion in goods on Sunday in a tweet after U.S.-China negotiations soured at the end of last week, giving less than five days' notice before the increase took affect.

The increase comes as U.S. and Chinese negotiators have launched make-or-break trade talks to try to salvage a deal to end their 10-month trade war. (Reporting by David Lawder; Editing by Peter Cooney)

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