USTR section 301 4-year review & proposed modifications
Data of publication: May 29, 2024
On May 5, 2022, the United States Trade Representative (USTR) began the statutory 4-year review of the July 6, 2018, and August 23, 2018, actions under section 301 of the Trade Act of 1974, investigating China’s technology transfer, intellectual property, and innovation practices. The review included approximately 1,500 written submissions and resulted in a comprehensive report evaluating the effectiveness of the actions. Due to the statutory review, the actions were modified to include additional duties and exclusions.
Review findings
- Section 301 tariffs have encouraged some positive changes in China’s laws but have not led to systematic reforms.
- China has not eliminated many problematic practices and continues to impose burdens on U.S. commerce.
- Despite limited measures to address negative perceptions, China aggressively acquires foreign technology through cyber means.
- Section 301 tariffs have reduced U.S. exposure to China's problematic practices.
- Additional tariffs could incentivize China to eliminate these practices.
Directed actions
On May 14, 2024, after considering the advice of the USTR, President Biden directed the Trade Representative to take a number of actions.
Section 301 duty rate modifications
This action included maintaining and, where appropriate, increasing the ad valorem duty rates on specific products from China to counteract burdens on U.S. commerce and encourage China to eliminate the identified practices. As a result, the Trade Representative shall modify the prior actions by adding or increasing section 301 ad valorem rates of duty for certain products of China in strategic sectors as follows:
- Battery parts (non-lithium-ion): 25% in 2024
- Electric vehicles: 100% in 2024
- Lithium-ion vehicle batteries: 25% in 2024
- Lithium-ion non-vehicle batteries: 25% in 2026
- Natural graphite: 25% in 2026
- Other critical minerals: 25% in 2024
- Permanent magnets: 25% in 2026
- Semiconductors: 50% in 2025
- Ship to shore cranes: 25% in 2024
- Solar cells: 50% in 2024
- Steel and aluminum products: 25% in 2024
For personal protective equipment (PPE):
- Facemasks: 25% in 2024
- Medical gloves: 25% in 2026
- Syringes and needles: 50% in 2024
The USTR has published a Federal Register Notice (FRN) that includes a proposed list of products and tariff increases. The proposed Section 301 modifications are further identified by their corresponding Harmonized Tariff Schedule number under Annex A. Some of these increases are delayed in an apparent effort to allow domestic companies time to increase production to compete with China.
Potential 301 duty exclusions for machinery used in domestic manufacturing
The USTR is opening specific sub-headings eligible for an exclusion process by which interested persons may request that particular machinery used in domestic manufacturing be temporarily excluded from section 301 tariffs. This will be specific to machinery classified within subheadings under Chapters 84 and 85 of the HTSUS. Certain solar manufacturing equipment will be prioritized. The list of the machinery, by HTSUS number, has been identified within the FRN under Annexes B and C.
Granting temporary exclusions for certain solar manufacturing equipment
With respect to the proposed solar manufacturing machinery exclusions in Annex C, the USTR requests comments on the scope of each exclusion, including any suggested amendments to the product description.
The USTR is soliciting comments regarding the proposed tariff increases. Interested persons are invited to comment on various topics, including the effectiveness of the proposed modification; the effects of the proposed modification on the U.S. economy, including consumers; and whether the subheadings identified for each product and sector adequately cover the products and sectors included in the President’s direction to USTR. Comments on exclusion-related proposals are being accepted as well. Comments must be submitted through USTR’s online comment portal. To submit written comments, use the docket on the portal entitled “Request for Comments: Proposed Modifications to the Section 301 Actions and Proposed Exclusion Process”, docket number USTR–2024–0007.
Important
: The comment period opens on May 29th and closes on June 28th.
important
The comment period opens on May 29th and closes on June 28th.
How to prepare
Companies should conduct a thorough review of the FRN and pay particular attention to the Annexes which provide a list of the impacted products by Harmonized Tariff Schedule number. Identify any products in your product database that are within the scope of the FRN, along with the potential duty increase, and timing of the increase. A comprehensive assessment of cost impact should be completed, as well as an analysis of alternate sourcing options should it be determined that the duty increase is not acceptable. Attention should also be given to any products that may be eligible for exclusion.
For more information on how ONESOURCE Global Trade solutions can assist you in managing Sectio 301 duties, including conducting trade lane analysis, please contact your Account Manager or Client Services Manager.