International Trade Today is providing readers with some of the top stories for Jan. 28 - Feb. 1 in case they were missed.
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.
A domestic trade association filed petitions on Feb. 1 with the Commerce Department and the International Trade Commission requesting new antidumping and countervailing duties on fabricated structural steel from Canada, Mexico and China. Commerce will now decide whether to begin AD/CVD investigations on fabricated structural steel that could eventually result in the assessment of AD/CV duties. The petition, filed by the American Institute of Steel Construction, targets steel mill products of various shapes that have been fabricated (and typically custom-manufactured) into articles suitable for erection or assembly into a variety of structures.
The House companion bill to Sen. Pat Toomey's attempt to roll back Section 232 tariffs (see 1901300022) was co-authored by two Democrats and two Republicans, and one of those Republicans, Rep. Mike Gallagher, R-Wis., said his near-term goal is to get 50 co-sponsors. So far, there are 17. One of the lead co-authors, Rep. Ron Kind, D-Wis., has been on the House Ways and Means Trade Subcommittee for years, and Gallagher is hoping he can get some traction in the committee. A spokesman for the new Trade Subcommittee chairman did not respond to a question about the bill by press time.
The Section 301 tariffs still apply to textile backpacks used to hold dolls even though that product was included in the Miscellaneous Tariff Bill that became law last year (see 1809140004), CBP said in a Dec. 10 ruling. That ruling, NY N301879, follows CBP's previously announced position that the Section 301 tariffs would still be imposed on MTB goods from China (see 1810150051). While the MTB allows for duty-free treatment of the backpacks, the 10 percent tariffs apply on those goods from China, CBP said.
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Dispute panels are forming at the World Trade Organization on the Section 301 tariffs the U.S. levied on China and on the retaliatory tariffs Turkey levied on the U.S. in response to U.S. tariffs on Turkish steel and aluminum. China said the tariffs, on about $250 billion worth of its exports, are damaging China's economic interests and the rules-based trading system. The panel on Turkish retaliation is the sixth panel formed on retaliation for the metals tariffs, which are applied around the world.
Apparel importers may still want to classify their hangers separately from apparel, but should take extra care in light of the potential application of Section 301 tariffs on the hangers, Sandler Travis said in a client alert. CBP has long held that some more substantial, reusable hangers are classifiable in subheading 3923.90.0080 as plastic articles for the conveyance or packing of goods, even when imported together with apparel. That subheading carries a 3% duty rate, though 10% Section 301 tariffs raise that to 13% if imported from China, and that could rise to 28% of no deal is reached on the tariffs by March 2 (see 1812140034). Nonetheless, importers should still perform an analysis on whether that rate would still be lower than the rate applicable to the garment itself if the hangers are less substantial and considered “packing material” not classified separately from the apparel, the alert said.
CBP is now accepting claims for drawback on Section 301 duties on products from China, said John Leonard, executive director-trade policy and programs, on a conference call held Jan. 23 to discuss issues related to the ongoing federal government shutdown. The agency has fixed a bug in ACE that was preventing Section 301 drawback claims and is now able to begin processing, though the agency’s ability to resolve particular issues will be limited due to staffing issues caused by the ongoing shutdown, he said.
International Trade Today is providing readers with some of the top stories for Jan. 14-18 in case they were missed.
A legislative effort from Rep. Sean Duffy, R-Wis., to expand the president's ability to impose new tariffs (see 1901160012) is a troubling prospect for retailers, according to the National Retail Federation. NRF Senior Vice President for Government Relations David French said Congress “should be working to protect local communities from an escalated trade war” brought on by the Trump administration’s Section 301 tariffs on Chinese imports and China’s retaliatory tariffs on U.S. goods. Duffy’s “misguided” legislation “would do the exact opposite, giving the executive branch limitless power to raise taxes in the form of tariffs,” French said. “Congress has already ceded far too much of its clear constitutional authority over tariffs, and we are witnessing the consequences unfold across the country. The idea that Congress would make matters even worse by further abdicating its role on trade policy is simply unconscionable.” Duffy's bill would give the president the ability to raise U.S. tariffs to match other countries' levels without having to justify the move through a safeguard or national security investigation.