The Office of the U.S. Trade Representative posted a notice on the coming tariff decrease for goods from China on the 4A list that was part of the phase one trade deal between the countries (see 2001150033). “In light of the scheduled entry into force of the phase one agreement,” the goods on the 4A list will be subject to 7.5 percent tariffs, down from 15 percent, starting Feb. 14 at 12:01 a.m. EST, the USTR said.
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 15 percent tariffs on goods from China included on list 4A will be reduced to 7.5 percent thirty days from today, a Trump administration official said during a Jan. 15 conference call with reporters. President Donald Trump previously announced the decrease, but it was not mentioned in materials released as part of the Phase One deal signed with China. A Federal Register notice on the reduction will be posted by the Office of the U.S. Trade Representative soon, the official said.
The Commerce Department issued Federal Register notices on its recently initiated antidumping duty investigations on forged steel fluid end blocks from Germany, India and Italy (A-428-847, A-533-893, A-475-840), as well as its new countervailing duty investigations on forged steel fluid end blocks from Germany, India, Italy and China (C-475-848, C-533-894, C-475-841, C-570-116).
Nearly seven in every 10 TV sets imported to the U.S. in November originated in Mexico, according to new Census Bureau import data accessed on Jan. 10 through the International Trade Commission’s DataWeb tool. November was the third full month that 15 percent List 4A Section 301 tariffs were in force on finished TV sets from China, causing profound shifts in TV-sourcing trends. The U.S. imported 3.66 million TVs from all countries in November, a 22.3 percent decline sequentially and down 40.8 percent from November 2018, DataWeb said. Unit imports for 2019's 11 months declined 4.5 percent year on year to 37.43 million sets.
U.S. smartphone importers abruptly shifted more sourcing toward Vietnam and less from China in November, the last full month before the scheduled imposition of 15 percent List 4B Section 301 tariffs on Chinese handsets, according to newly released Census Bureau data accessed Jan. 9 through the International Trade Commission’s DataWeb tool. The Trump administration suspended the List 4B tariffs Dec. 13, less than 48 hours before they were to take effect, after reaching a phase one trade deal with China.
CBP has assessed about $53 billion in duties under the major trade remedies started during the Trump administration as of Jan. 8, according to CBP's trade statistics page. That includes $42.8 billion in duties from the Section 301 tariffs on goods from China, and $177.8 billion in Section 301 tariffs on goods from the EU. CBP also has assessed about $6.6 billion under the Section 232 tariffs on steel and $1.9 billion under tariffs on aluminum. The Section 201 trade remedies on washing machines, washing machine parts and solar cells account for $1.4 billion in assessed tariffs. CBP's statistics account for refunds provided to importers, an agency spokesperson said.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said he's been told it's going to take three or four days for six other Senate committees to clear the U.S.-Mexico-Canada Agreement so that it can go to the floor for a vote. Whether it can come up the week of Jan. 21 will depend on whether the articles of impeachment have arrived by then, he noted.
Vizio became the first major TV brand to seek exclusions from the List 4A Section 301 tariffs on finished flat-panel sets from China when it filed Jan. 7 for exemptions on four 10-digit classifications of goods under subheading 8528.72.64 that vary by screen size. Vizio is “working closely” with its third-party original design manufacturers to shift production outside China, the vendor posted in the Office of the U.S. Trade Representative public docket. “Some of the ODMs moved manufacturing to third countries including Mexico in the late Q3 2019 timeframe.” Despite those efforts, it’s “extremely difficult” for Vizio to transfer production to other third countries, including Taiwan, Thailand and Vietnam, “without significant cost” that would “far exceed” the “modest profit margin,” it said. That would “likely” result in a “significant price increase to American consumers,” it said. “Responsibly exploring alternatives to manufacturing, without sacrificing quality, safety, and the low prices that define our brand takes considerable time.” List 4A tariffs took effect Sept. 1 at 15 percent, but are due to be rolled back by half (see 1912310010).
For five months in 2018, it looked like Chinese injection molds were going to cost 25 percent more because of Section 301 tariffs, and the import volume from China in 2018 fell nearly 12 percent, to $385 million. Overall imports of injection molds -- which were valued at $1.8 billion in 2018 -- rose 5 percent that year.
The International Trade Commission is working to add provisions on the Trade Agreement between the United States and Japan to the Harmonized Tariff Schedule of the U.S., James Holbein, director of the ITC’s Office of Tariff Affairs and Trade Agreements, said in an interview Jan. 7. Technical issues with the ITC’s electronic system for updating the tariff schedule had led to the omission of new General Note 36, as well as provisions in chapter 99, from the 2020 Basic Edition of the HTS, Holbein said. The ITC’s information technology office is currently working to fix those issues, he said.