USTR Keeps Most Proposed Section 301 Changes; Doubles Proposed Tariffs on Some Medical Goods

Tariffs on imports from China of electric vehicles, EV batteries, solar cells and wafers, face masks, needles and syringes, critical minerals and steel and aluminum will go up Sept. 27, with more Section 301 tariff hikes planned for Jan. 1, 2025, and Jan. 1, 2026.

The Office of the U.S. Trade Representative made some changes from the original proposal issued in May, including doubling the tariff on syringes from 50% to 100%; making an exclusion for enteral syringes; and providing an exemption for a new tariff on ship-to-shore cranes for cranes ordered before May 14.

While most of the actions will hike tariffs on Chinese goods seen as strategic by the Biden administration, the administration also plans to allow importers of solar cell and solar wafer making equipment, as well as importers of industrial machines of up to 317 tariff subheadings, to import those goods without paying Section 301 tariffs that formerly applied.

The solar cell and solar wafer making equipment tariff waivers are now retroactive to Jan. 1 of this year and last through May 31, 2025, but USTR decided to remove five kinds of solar module making equipment from the exclusions list, including frame attachment machines, machines that handle modules during assembly, machines that attach junction boxes and laminate interconnected cell string, cell soldering machines and module encapsulant preparation machines. All those machines enter under HTS 8486.20.0000 or 8486.40.0030, but so do many of the machines that are still going to receive a waiver.

Solar Energy Manufacturers for America Coalition Executive Director Mike Carr said the increase in tariffs on Chinese solar cells and wafers and the tariff relief on machinery "will boost U.S. manufacturing and send an important signal to China." He said it aligns the subsidies for manufacturing available through the Inflation Reduction Act with trade policy.

The American Association of Port Authorities thanked USTR for allowing cranes that were ordered before a 25% tariff was imposed to enter under previous rates. AAPA CEO Cary Davis said, ""This wise decision will prevent more than $130 million in unexpected costs for these public ports with tight budgets." However, he said no tariffs on cranes should be imposed until there are ship-to-shore cranes available from domestic manufacturers.

USTR received more than 1,100 comments about the modifications of the Section 301 action; 420 were about the higher tariffs, 656 were about the proposed 312 industrial machines that would receive exclusions to existing Section 301 tariffs, and 80 were about the 19 tariff exclusions for solar panel manufacturing equipment. Those last exclusions went into effect at the time of the first announcement.

The government decided to add five more industrial machines to the exclusion eligible list -- water purification machines, HTS 8421.21.00; liquid purifying machines, 8421.29.00; gas purifying machines, 8421.39.01; industrial robots, 8428.70.00; and printing machinery, 8443.19.30.

Importers of industrial machines that fall under the 317 tariff headings must file a request for an exclusion, and others will have the opportunity to argue that the exclusion is not warranted because a domestic manufacturer can provide the equipment. There were no details on where those submissions should be sent in the notice or its annexes.

The notice said that USTR decided to remove the solar panel equipment categories because it was able to verify comments that said "alternative sources for the machinery are available, both domestically and in Europe." There were comments that some of the cell-manufacturing equipment is also available outside China, but USTR said it was not able to determine how much supply exists.

Of the comments received, approximately 420 comments expressed views about the proposed tariff increases on certain products, approximately 656 comments expressed views about the proposed subheadings eligible for consideration of temporary exclusions under an exclusion process for machinery used in domestic manufacturing, and approximately 80 comments expressed views about the proposed 19 temporary exclusions for solar manufacturing equipment.

USTR didn't remove any products from the list of goods slated to see higher tariffs, but it did agree to allow an exclusion for enteral syringes for several years. After receiving comments that a 50% tariff on Chinese syringes and needles wouldn't be high enough to make U.S. manufacturers competitive, the administration will apply 100% tariffs to those goods starting Sept. 27.

It also increased the tariff rate for surgical gloves, from 25% to start in 2026 to 50%, to start in 2025, and 100% in 2026. For statistical reporting number 6307.90.9870 (face masks of textile, disposable), the tariff rate will be 25% in 2025 and 50% in 2026, unless a new administration changes course.

USTR will issue a future notice to solicit comments on adding three tungsten tariff codes that were not in the list of hikes in May, and also will solicit comments on hiking tariffs on pure silicon and on chemicals doped for use with silicon in semiconductor fabrication, 2804.61.00 and 3818.00.00. The USTR proposes applying 50% tariffs to those two subheadings.

A few trade groups complained that the tariffs on China only go up, and the non-market practices that the tariffs are designed to address have not changed in six years.

National Foreign Trade Council Vice President Tiffany Smith called the increased tariffs -- and the plans to apply them to de minimis entries "a regrettable move in the wrong direction." She said U.S. importers have paid $221 billion in Section 301 duties since 2018.

U.S.-China Business Council President Craig Allen said his group is disappointed in the decision to maintain and hike tariffs in Section 301. "Tariffs make it harder for American companies to compete in the US and abroad, cost American jobs, increase consumer prices, and invite Chinese retaliation," he said.

The Coalition for a Prosperous America, one of the most vocal supporters of tariffs on China, said they've been "an essential tool for reshoring and strengthening domestic production."

Chairman Zach Mottl said it's not enough, and that the country should end most favored nation status for China and end de minimis. "These steps are critical to ensuring that American workers and businesses are no longer undercut by China’s predatory trade practices or killed by Chinese fentanyl.”