First Section 301 Tariff Hike Scheduled for Aug. 1; Solar Equipment Tariffs Lifted May 28

Five products identified by the Biden administration as deserving 100% Section 301 tariffs for strategic reasons -- electric vans, buses, low-speed golf-cart like EVs, electric cars, and plug-in hybrids -- will see higher rates on Aug. 1.

That will also be the date for new Section 301 tariffs of 25% on ship to shore cranes, lithium-ion batteries for EVs and lead-acid battery parts, three categories of disposable masks, 26 critical minerals, more than 100 HTS codes covering iron and steel products, and 31 aluminum HTS codes.

Solar cells, whether or not assembled into modules, and syringes and needles will see 50% Section 301 tariffs on that date.

The administration plans that permanent magnets from China will face 25% tariffs in 2025, and a number of products in subheading 8541 will see 50% Section 301 tariffs on Jan. 1 of that year.

Lithium-ion batteries other than in EVs, 8507.60.0020, will see 25% Section 301 tariffs on Jan. 1, 2026, as will three forms of natural graphite.

The Office of the U.S. Trade Representative notice is silent on the fate of 429 tariff exclusions that are set to expire three days after its publication; that list includes 77 medical products that were excluded during the pandemic. The masks were not on that list. However, 2504.90.00 Natural graphite, other than in powder or in flakes, is on that exclusion list, and it is slated to face 25% tariffs under the modifications on Jan. 1, 2026. Artificial graphite, used in lithium-ion batteries, also is on the current exclusions list.

The notice is scheduled to be published in the Federal Register May 28, and a comment period on the tariff hikes this year, those planned for 2025 and 2026, and proposed exclusions to Section 301 tariffs for industrial machinery will open May 29 at https://comments.ustr.gov and run through June 28. The agency said it's open to hearing if other kinds of industrial machinery should be covered besides the subheadings it identified.

Solar manufacturing equipment imported from China will automatically be exempt from Section 301 tariffs on May 28. That category covers 19 products, under statistical reporting numbers 8486.10.0000, 8486.20.0000 or 8486.40.0030.

Exclusions for manufacturing equipment, both solar and in other sectors, will be effective through May 31, 2025.

Companies must apply for an exclusion for manufacturing equipment outside the solar sector, included in more than 100 8-digit tariff lines in headings 8417-8420, 8422, 8429, 8430, 8432-8439, 8441, 8442, 8444-8449, 8451-8465, 8468, 8475, 8477-8479, 8486, 8514, 8515 and 8543 -- and the USTR hasn't yet published how to do that.

Sidley Austin Customs Attorney Ted Murphy, in a client note after the release, noted that some HTS 10-digit codes on the list that will increase are broad, such as 8507.60.0020. While the conversation around that category has been about larger, energy storage lithium-ion batteries used in buildings or utility applications, Murphy noted it would cover replacement lithium-ion batteries for laptops or other consumer electronics. "Companies that import products that are even tangentially related to the sectors identified by the White House/USTR should review Annex A to determine whether any of their products are covered," he advised.

The agency asked for comments specifically on:

• The effectiveness of the proposed modification in counteracting or getting China to eliminate its technology transfer and abusive intellectual property practices.
• The economic effects of the proposal.
• The scope of the product description that covers ship-to-shore cranes under subheading 8426.19.00.
• Whether tariff rates on face masks, medical gloves, and syringes and needles, should be higher than the 25% or 50% rates.
• With respect to face masks, whether additional statistical reporting codes under tariff subheading 6307.90.98 should be included.
• Whether the tariff subheadings listed are the right ones to comply with the presidential memo.