U.S. Trade Representative Robert Lighthizer said there's no need for more money for Section 301 exclusion adjudicators, but will assess whether additional funding is necessary as the process continues. He also said "USTR is reviewing various courses of action with respect to whether and how to renew the exclusions granted for Lists 1 and 2" in a newly released written response to one of the chairman's questions stemming from his testimony in June before the Senate Finance Committee.
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 Office of the U.S. Trade Representative issued its first set of product exclusions from the second group of Section 301 tariffs on goods from China. Newly exempt from the tariffs are "69 specially prepared product descriptions." The exclusions cover 292 separate requests, according to the notice. The product exclusions apply retroactively to Aug. 23, 2018, the date the second set of tariffs took effect, and will remain in effect until one year after the notice is published.
The Court of International Trade will allow Moen to end its lawsuit over what the company said were misclassified showerheads despite the Department of Justice's objections, CIT said in a July 26 ruling. Moen, which sued CBP in 2015 over the classification of the goods, filed a motion to dismiss because the goods at issue are now subject to the Section 301 25 percent tariffs on imports from China. The DOJ fought the motion because of the already expended time and resources and because Moen will "likely litigate the correct classification of its showerheads if and when goods classifiable under its claimed tariff provision are no longer subject to the 301 duties.”
The Office of the U.S. Trade Representative is publishing its first list of product exclusions from the second tranche of $16 billion in Section 301 tariffs on China (see 1808150016). This list of exclusions includes 69 subsets of tariff numbers in chapters 39, 84, 85, 86, 87 and 90. The new exclusions take effect retroactively from Aug. 23, 2018, when the $16 billion in tariffs originally entered into force, and will remain for one year following publication of USTR’s notice. USTR is creating Harmonized Tariff Schedule subheading 9903.88.12 for the new set of exclusions.
President Donald Trump appeared to put the kibosh on Apple’s requests for List 3 Section 301 tariff exclusions on Chinese imports of graphics processing modules, power supplies, heat sinks and a dozen other types of components for the Mac Pro desktop due this fall. Tweeted Trump on July 26: “Apple will not be given Tariff waiver, or relief, for Mac Pro parts that are made in China. Make them in the USA, no Tariffs!” There are “no other sources” outside China “for this proprietary, Apple-designed component,” Apple said in each of the 15 product exclusion requests it filed July 18, as searchable on the Office of the U.S. Trade Representative public docket. “This product is a component of a consumer electronic device,” Apple said. “It is not strategically important or related to ‘Made in China 2025' or other Chinese industrial programs.” Public responses in support or opposition to the exclusion requests are due Aug. 1, and Apple had few backers among those who weighed in with an opinion as of July 26. “The USTR should not set a harmful precedent of exempting companies from tariffs that move jobs to an overt adversary of the United States,” commented Gregory Lewandowski on Apple’s request for tariff exclusions on Mac Pro graphics processing modules. “This is absolute garbage,” commented Logan Marotz. “We cannot continue to bend to the will of these companies. They knew the possible consequences of their actions by moving their assembly factories over seas. Tough luck, but this is the game they play.” Apple didn’t comment, nor did USTR.
CBP has assessed about $30.9 billion in duties under the major trade remedies started during the Trump administration as of July 24, according to CBP's trade statistics page. That includes $22.1 billion in duties from the Section 301 tariffs on goods from China. The first tranche of Section 301 tariffs took effect on July 6, 2018 (see 1807050033); the second took effect on Aug. 23, 2018 (see 1808070046); and the third, on Sept. 24, 2018 (see 1809240015). 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 $933.2 million in assessed tariffs.
After Guatemala's high court ruled that country could not enter into an agreement that would deny Hondurans refuge in the U.S. unless those migrants applied for asylum in Guatemala, President Donald Trump lashed out July 23 on Twitter. "Guatemala, which has been forming Caravans and sending large numbers of people, some with criminal records, to the United States, has decided to break the deal they had with us on signing a necessary Safe Third [country] Agreement. We were ready to go. Now we are looking at the “BAN,” Tariffs, Remittance Fees, or all of the above. Guatemala has not been good. Big U.S. taxpayer dollars going to them was cut off by me 9 months ago," he wrote.
International Trade Today is providing readers with some of the top stories for July 15-19 in case they were missed.
CBP created Harmonized System Update (HSU) 1913 on July 21, containing 113 Automated Broker Interface records and 23 Harmonized Tariff Schedule record, it said in a CSMS message. The update includes adjustments required by the Office of the U.S. Trade Representative's announcement of new exemptions from Section 301 tariffs on China (see 1907080008). Modifications required by the verification of the 2019 HTS are included as well.
China believes that trade “frictions” with the U.S. “should be resolved through dialogue and consultation,” a Foreign Affairs Ministry spokesperson said on July 17. He was asked about President Donald Trump’s July 16 Cabinet meeting remarks that the U.S. has a “long way to go” before reaching a trade deal with China and can still impose the threatened List 4 Section 301 tariffs on $325 billion worth of Chinese goods “if we want.” If the U.S. “thinks there is still a long way to go before a deal is concluded, well, as the Chinese saying goes, a journey of a thousand miles begins with a single step,” the spokesperson said. “No matter how long the way is, as long as you step forward, you will eventually reach the destination.” In the face of the U.S. threat to impose the List 4 duties, “China will firmly defend its own interests,” the spokesperson said. “If the U.S. does impose new tariffs, that will indeed set new obstacles for the trade talks. There will be an even longer way to go before reaching a deal.”