Although President-elect Joe Biden has said he wants to focus on domestic issues before turning to trade, Brian Pomper, a former chief international trade counsel when the Senate Finance Committee was controlled by Democrats, said he's going to have to deal with trade right away if the Trump administration imposes tariffs on France on Jan. 1 over its digital services tax proposal.
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 Nov. 2-8:
CBP has some qualms with the operational aspects of ending the de minimis exemption for goods subject to Section 301 tariffs, Executive Assistant Commissioner for International Trade Brenda Smith said while speaking on the virtual Coalition of New England Companies for Trade conference on Nov. 9. There's a CBP proposal for the change that's under Office of Management and Budget review (see 2009040026). “We do have some concerns,” she said.
CBP has been swamped with hundreds of thousands of protests related to Section 301 litigation on lists 3 and 4A China tariffs, as importers seek to preserve their rights to refunds if the lawsuits are successful, Robert Silverman of Grunfeld Desiderio said Nov. 9. Negotiations are ongoing with the Department of Justice to untether claims from liquidation dates, which would free importers from potentially having to file the protests to protect their rights, Silverman said, speaking at the Coalition of New England Companies for Trade’s virtual Northeast Cargo Symposium. “We’re trying to get DOJ to agree that liquidation is irrelevant. If they do, then we can stop filing these silly protests,” he said.
A Joe Biden administration is seen by many as likely to return the U.S. to a more traditional approach to international trade, but there's much still unknown about how and when an unwinding of the Trump administration's policies would occur. Biden would be able to make meaningful changes around trade regardless of whether Republicans retain Senate control, and there is an expectation that he would undertake a “review” of Trump's trade remedies, including under sections 232 and 301, according to a report in The Wall Street Journal.
The mistrust by the current administration of the de minimis exemption for low-value shipments may provide an opportunity to revise the law and address some inconsistent approaches, Bryan Wolfe, vice president-international trade at Ascena Retail Group, said during the National Association of Foreign-Trade Zones virtual conference on Nov. 6. Ascena, the parent company of Ann Taylor, Loft and other brands, is a leading member of Ship Safe Coalition, which advocates for policy changes around de minimis. The coalition expects that some coming changes to the de minimis entry process could be a time for “compromise between eliminating de minimis altogether and keeping it as is,” Wolfe said in his presentation.
The following lawsuits were filed at the Court of International Trade during the week of Oct. 26 - Nov. 1:
China doesn’t comment on U.S. internal affairs such as its presidential election, a Foreign Affairs Ministry spokesperson said Oct. 30 when asked about comments by a Joe Biden aide that the Democratic Party nominee would consult with allies on what to do about the Section 301 tariffs on Chinese imports if he's elected president. “China's policy on the United States remains highly stable and consistent,” the spokesperson said, according to a transcript of a news conference. “We are committed to developing a China-U.S. relationship featuring non-conflict, non-confrontation, mutual respect and win-win cooperation.” Biden would seek “collective leverage” against China by bonding with allies to curb Beijing's allegedly unfair trade practices, foreign policy adviser Jeffrey Prescott told Reuters Oct. 28. “The failure of the Trump administration has been to go it alone.” Biden won’t “lock into any premature position before we see exactly what we’re inheriting,” Prescott said when asked if Biden would lift the tariffs unilaterally if elected. “Consulting with allies is going to be a central part of that.”
The World Trade Organization told member countries this week that the U.S. has filed an appeal on a panel report on the legality of its Section 301 tariffs on Chinese imports. Because there is no appellate body, there is no way to appeal a case, but China cannot take action under WTO rules while the appeal is pending. In practical terms, however, China already retaliated years ago for the Section 301 tariffs.
The following lawsuits were filed at the Court of International Trade during the week of Oct. 19-25: