President Donald Trump said he delayed the imposition of 10 percent Section 301 tariffs on hundreds of Chinese products "for Christmas season, just in case some of the tariffs would have an impact on U.S. customers, which, so far, they've had virtually none. The only impact has been that we've collected almost $60 billion from China -- compliments of China."
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.
In a review of how the domestic industry has or has not been given breathing room to adjust to imports, the International Trade Commission says there has been some improvement in the financial performance of domestic washing machine producers, increased production and employment, and progress in implementing adjustment plans. Imports have declined, and Samsung and LG started production of washers in South Carolina and Tennessee, respectively, though they are having difficulties ramping up.
The final list of goods subject to the latest round of Section 301 tariffs will likely be out in days, and duties will probably remain in place for the foreseeable future, given the current state of U.S.-China trade negotiations, trade consultant David Trumbull of Agathon Associates said in an Aug. 8 post on his blog Textiles and Trade. “In view of short time before the tariffs are anticipated and the fact that [the Office of the U.S. Trade Representative] has already gathered public comments and testimony and started analysis, that USTR will likely issue the final list 4 within a few days,” he said. “Based on our observations from lists 1 through 3, we believe it unlikely that USTR will remove much from list 4. We also believe that, given the current state of U.S.-China trade talks, which are at the coldest ever, there is little likelihood of averting tariffs, meaning the September 1, 2019, [start] will likely stick. Finally, in view of the way List 3 went from 10% to 25%, we believe that if this trade dispute continues into 2020, there is substantial risk of 25% tariff of list 4,” Trumbull said.
CBP added the ability in ACE for importers to file entries with the first group of excluded goods from the third tranche of Section 301 tariffs on Aug. 8, it said in a CSMS message. Filers of imported products that were granted an exclusion (see 1908050010) should report the regular Chapters 39, 54, 56, 73, 87 and 89 Harmonized Tariff Schedule number, as well as subheading 9903.88.13, for products subject to Section 301 duties on products from China but that have been granted an exclusion by the Office of the U.S. Trade Representative. “Importers shall not submit the corresponding Chapter 99 HTS number for the Section 301 duties when HTS 9903.88.13 is submitted,” CBP said.
CBP has assessed about $33.4 billion in duties under the major trade remedies started during the Trump administration as of Aug. 7, according to CBP's trade statistics page. That is about an 8 percent increase from the previous update on July 24 (see 1907250020). That includes $24.4 billion in duties from the Section 301 tariffs on goods from China. CBP also has assessed about $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 (see 1801230052), imposed Jan. 23, 2018, account for $962.4 million in assessed tariffs.
The International Trade Commission in recent days posted Revision 11 to the 2019 Harmonized Tariff Schedule. All changes relate to implementation of the first group of exclusions from tranche three of Section 301 tariffs on products from China (see 1908050010). That includes the creation of new tariff subheading 9903.88.13 for products filed under the new exclusions.
Tariffs Hurt the Heartland says importers paid $6 billion in tariffs in June, up $2.5 billion, or 74 percent, from the same month in 2018. The report, based on Census data, covers the first month when Section 301 tariffs on $200 billion in imports from China were at 25 percent rather than 10 percent. The advocacy group also noted that June was the 11th month in a row that American exports targeted for retaliation declined by more than 15 percent.
International Trade Today is providing readers with some of the top stories for July 29 - Aug. 2 in case they were missed.
CBP correctly applied two Section 301 tariff rates to imported toolsets from China, CBP said in a July 30 ruling. Stanley Black & Decker, through its lawyer at Follick & Bessich, requested reconsideration of an April ruling that found that a tool set imported by the Apex Tool Group could be subject to multiple tariffs (see 1904240014). The same issue seems to be under review at the Office of the U.S. Trade Representative after a lawmaker mentioned potential broader impact if the fourth tranche of tariffs takes effect and asked whether the USTR considered CBP's interpretation to be correct (see 1907310052).
Even at only 10 percent, the List 4 Section 301 tariffs due to take effect Sept. 1 on up to $300 billion worth of Chinese imports “would have a much larger impact on the U.S. tech sector” than the previous three rounds of 25 percent duties, an Aug. 5 S&P Global Ratings report said. The List 4 tariffs would “significantly raise costs for manufacturers and prices for consumers,” much more so than the current tariffs, it said.