A senior adviser to the U.S. trade representative said that Section 301 tariffs are no longer in place to try to change Chinese economic behavior but suggested they can't be modified unless trade policymakers understand how removing them would influence the administration's desire "to move to a resilience economy away from an efficient economy."
Section 301 Tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump Administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump Administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions—particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Almost three quarters of U.S. imports from China were subject to Section 301 tariffs, which ranged from 15% to 25%. The U.S. and China engaged in negotiations resulting in the “U.S.-China Phase One Trade Agreement”, signed in January 2020.
The Biden Administration took steps in 2021 to eliminate foreign policies subject to Section 301 investigations. The administration has extended and reinstated many of the tariffs enacted during the Trump administration but is conducting a review of all Section 301 actions against China.
The following lawsuits were filed at the Court of International Trade during the week of Sept. 19-25:
The Housing Affordability Coalition, a new group inspired by the invitation to submit information to the government about the economic impact of Section 301 tariffs on Chinese imports, is arguing that higher tariffs on such items as vinyl flooring, cabinets, light fixtures, windows and the like is contributing to higher costs for new houses.
Countries whose industries have been damaged by Chinese oversubsidization and overcapacity have tried to discourage subsidies in China, with results that have "been mixed at best," said Anna Ashton, the Eurasia Group's director of China corporate affairs and U.S.-China relations. She said allowing China to join the World Trade Organization, more than 20 years ago, was part of this system of carrots and sticks to effect changes in China.
The Court of International Trade in its April 1 remand order gave the Office of the U.S. Trade Representative “one final opportunity” to cure its Administrative Procedure Act violations and "flesh out" the reasons why it rejected the 9,000+ comments it received in the lists 3 and 4A Section 301 tariff rulemakings, without devising “new rationales for dismissing them,” Akin Gump lawyers for lead Section 301 plaintiffs HMTX Industries and Jasco Products said in comments on USTR’s Aug. 1 remand determination. “USTR’s response to that directive flunks the Court’s test,” they said (In Re Section 301 Cases, CIT #21-00052).
The Court of International Trade “bent over backwards” to allow the Office of the U.S. Trade Representative to comply with its Administrative Procedure Act obligations in its imposition of the lists 3 and 4A Section 301 tariffs on Chinese goods when it remanded the duties to the agency for further explanation on the rationale for the actions it took in the context of the comments it received, said an amicus brief filed Sept. 14 in the massive Section 301 litigation from the Retail Litigation Center, CTA, the National Retail Federation and four other trade associations. With USTR’s “non-responsive” answer to the remand order, the time has come for the court “to impose the normal remedy for unlawful agency action” and to vacate the lists 3 and 4A tariffs, it said (In Re Section 301 Cases, CIT #21-00052).
The following lawsuits were filed at the Court of International Trade during the week of Sept. 5-11:
The following lawsuits were filed at the Court of International Trade during the week of Aug. 19 - Sept. 4:
When asked what the U.S. wants from China in economic terms, U.S. Trade Representative Katherine Tai borrowed a metaphor from a former assistant U.S. trade representative responsible for trade negotiations between the U.S. and China. She said that he said the trade relationship with China is like two teams showing up to play football, but one is playing American football, and the other is playing what the rest of the world calls football that the U.S. calls soccer.
The lists 1 and 2 Section 301 tariffs on Chinese imports didn’t terminate on the fourth anniversaries of their imposition dates, July 6 and Aug. 23, after the Office of the U.S. Trade Representative received “numerous requests” from “domestic industries” to keep the duties intact, according to an agency notice late Sept. 2.