USTR finalizes the China section 301 review
Date of publication: September 25th, 2024
On September 13, 2024, the United States Trade Representative (USTR) published Final Notice of Modification of actions on impacted Chinese origin products subject to increase in additional Section 301 tariffs and applicable exclusions. FRN 76581, was published on September 18, 2024, https://www.govinfo.gov/content/pkg/FR-2024-09-18/pdf/2024-21217.pdf
Summary
The U.S. Trade Representative, under the direction of the President, has decided to modify actions taken in the Section 301 investigation of China’s technology transfer, intellectual property, and innovation practices. This includes imposing additional Section 301 duties or increasing existing duties on certain Chinese products in strategic sectors, proposing tariff rate increases for specific products, and providing temporary exclusions for certain machinery and solar manufacturing equipment.
This follows the proposed modifications that came out in May 2024, following the four-year review. In the May 28th notice, the USTR proposed increasing Section 301 duties on 382 HTSUS subheadings and 5 statistical reporting numbers of the HTSUS. Many largely adopted although some updates have been made to “strengthen” policies and protect American businesses. USTR expects to launch the machinery exclusions process soon, as well as the comment period for proposed modifications of tariff rates on certain tungsten, wafers, and polysilicon tariff lines.
Dates
- Tariff increases in 2024 are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after September 27, 2024.
- Tariff increases in 2025 and 2026 are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after January 1 of the corresponding year.
- Exclusions for solar equipment are retroactive and applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after January 1, 2024, and through May 31, 2025.
Background
On May 14, 2024, taking into consideration the U.S. Trade Representative’s findings in the Report and recommendations, the President issued a Memorandum (President’s Memorandum) that directed the U.S. Trade Representative to: maintain, as appropriate and consistent with this memorandum, the ad valorem rates of duty and lists of products subject to the actions taken under the Section 301 investigation and to further encourage China to eliminate the acts, policies, and practices at issue, and to counteract the burden or restriction of these acts, policies, and practices, the Trade Representative shall modify the actions taken in the investigation to increase Section 301 ad valorem rates of duty for certain specified products of China.
In particular, the President’s Memorandum specified categories of products for proposed tariff increases, tariff rates for those products, and year for tariff increases. With respect to tariff increases, the President directed increases on the following products:
- Battery parts (non-lithium-ion batteries) – Increase rate to 25% in 2024
- Electric vehicles – Increase rate to 100% in 2024
- Facemasks – Increase rate to no less than 25% in 2024
- Lithium-ion electrical vehicle batteries – Increase rate to 25% in 2024
- Lithium-ion non-electrical vehicle batteries – Increase rate to 25% in 2026
- Medical gloves – Increase rate to no less than 25% in 2026
- Natural graphite – Increase rate to 25% in 2026
- Other critical minerals – Increase rate to 25% in 2024
- Permanent magnets – Increase rate to 25% in 2026
- Semiconductors – Increase rate to 50% in 2025
- Ship-to-shore cranes – Increase rate to 25% in 2024
- Solar cells (whether or not assembled into modules) – Increase rate to 50% in 2024
- Steel and aluminum products – Increase rate to 25% in 2024
- Syringes and needles – Increase rate to no less than 50% in 2024
Determination to modify actions
Based on public comments, the President's direction, and the advice of the Section 301 Committee, USTR has determined to increase tariffs on specified products and provide temporary exclusions for certain solar manufacturing equipment. The adjustments are discussed in the Annexes
- Annex A: Informal table of tariff increases.
- Annex B: Temporary exclusions for solar manufacturing equipment.
- Annex C: HTSUS modifications (impose additional duties, increase rates of additional duties, and to exclude certain solar manufacturing equipment from additional duties)
- Annex D: Importer Certification for ship-to-shore cranes.
- Annex E: List of HTSUS subheadings eligible for temporary exclusion.
Companies should analyze their product database as it relates to US imports from China that are covered under this most recent action to determine the potential cost increases that could be attributed to this change. Impacted commodities are identified by HTSUS in the Annexes shown which will assist in streamlining this process.
Conclusion
The U.S. Trade Representative will continue to monitor and consider further modifications to the actions taken in this investigation, taking into account public comments and the President's direction.
Recognizing the importance of these changes for our clients, we have already made them available in ONESOURCE Global Trade Content (GTC). For more information on how ONESOURCE Global Trade solutions can assist you in adopting our Global Trade Content and managing compliance with trade remedies, please contact your Account Manager or Client Services Manager.