More than half of all exclusions from list four Section 301 China tariffs are set to expire Sept. 1, after the Office of the U.S. Trade Representative declined to extend them in the run-up to their expiration. USTR granted extensions to 87 of the more than 200 list four exclusions published to date.
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 Aug. 17-23:
After the first high-level review of the phase one trade deal, the principals talked about progress and ensuring the success of the U.S.-China trade agreement, but some believe the happy talk can't obscure that China and the U.S. are disentangling their mutual dependency in tech goods and services. “There is a re-alignment that is happening in real time,” Rideau Potomac Strategy Group President Eric Miller said in an Aug. 25 phone interview, the day after the call. U.S. and Chinese trade officials reemphasized their commitment to the phase one agreement during the Aug. 24 call, the Office of the U.S. Trade Representative said.
The Office of the U.S. Trade Representative will exclude two more products from the third list of Section 301 tariffs on products from China, it said in a notice released Aug. 21. The exclusions will apply retroactively to Sept. 24, 2018, the date the tariffs on the third list took effect, and through Aug. 7, 2020, it said. The new exclusions will fall under previously created subheading 9903.88.48.
Some “high tech” goods of Chinese origin sent to Mexico for minimal handling and then to the U.S. are eligible for USMCA tariff treatment, CBP said in an Aug. 7 ruling. Jose Fierro, an El Paso, Texas, customs broker, requested the ruling less than a week after USMCA entered into force July 1. The broker said that a client “has contracted with a Mexican maquiladora facility to provide certain logistical services” and inquired whether USMCA treatment would apply.
CBP “personnel from the Ports of Entry and Centers of Excellence and Expertise (Centers) are directed to neither issue marking notices, nor take further enforcement actions on goods produced in Hong Kong” until Sept. 25, the agency said in a CSMS message. CBP is allowing for a transition period for the new marking requirements on goods produced in Hong Kong, which will have to be marked as from China starting Sept. 25 (see 2008100027). “Centers should take measures to inform accounts of these new marking rules for Hong Kong set forth in the” July 14 presidential Executive Order on Hong Kong Normalization, it said. CBP still hasn't specifically addressed whether Hong Kong goods will be subject to the Section 301 tariffs on goods from China or other trade remedies.
The following lawsuits were filed at the Court of International Trade during the week of Aug. 3-9:
High demand for telework and remote-learning connectivity tools sent Q2 laptop and tablet imports soaring by triple digits from Q1, according to new Census Bureau data accessed Aug. 9 through the International Trade Commission’s DataWeb tool. Lockdown-induced TV import growth also was robust in the quarter, but intense commoditization was the story there, even in the largest screen sizes.
The broader impact of CBP's ruling on unsold low-value goods imported under Section 321 exemptions may be somewhat limited, industry experts said in recent interviews. The ruling (see 2007310036) laid out how the agency determines what entities can be considered a “person” for unsold Section 321 shipments.
The Office of the U.S. Trade Representative is requesting comments on whether new tariff exclusions granted to Chinese imports on Section 301 List 4 that are set to expire Sept. 1 (see 2008060008) should be extended for up to another year, it said in a notice released Aug. 10. The agency is already accepting comments on previously granted extensions that expire on Sept. 1 (see 2007150036). The comments are due by Aug. 20, it said. Each exclusion will be evaluated independently. The evaluation's focus will be on whether, despite the first imposition of these additional duties, the particular product remains available only from China. The companies are required to post a public rationale.