Hundreds of companies -- the vast majority in opposition to new duties on goods from China -- asked to testify during four days of hearings beginning Aug. 20 on the proposed third tranche of Section 301 tariffs on an estimated $200 billion worth of Chinese imports. Requests were due Aug. 13 in docket USTR-2018-0026 under the deadline U.S. Trade Representative Robert Lighthizer extended from July 27 when he announced Aug. 1 he will “consider,” at President Donald Trump’s direction, raising the third tranche of proposed duties to 25 percent from 10 percent. Lighthizer in an Aug. 7 notice said he reserves the option to “extend the length of the hearing depending on the number of additional interested persons who request to appear.”
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.
ATLANTA -- CBP has assessed about $2.7 billion in duties under the recent major trade remedies started during the Trump administration, said John Leonard, executive director-trade policy and programs, during an Aug. 14 meeting with reporters at the CBP 2018 Trade Symposium. That includes $477 million in duties from the Section 301 tariffs on goods from China so far, he said. The first tranche of Section 301 tariffs took effect on July 6 (see 1807050033) and more are scheduled to take effect on Aug. 23 (see 1808070046). CBP also has assessed just over $2 billion under the Section 232 tariffs on steel and aluminum and $263 million under the Section 201 trade remedies on washing machines and solar cells (see 1801230052). Leonard also noted that the Section 201 tariff-rate quota for washer parts was recently reached. According to the most recent quota status report, the washer parts TRQ was filled as of July 23.
The proposed third tranche of 25 percent Section 301 tariffs on Chinese imports targets equipment “critical for the build-out” of 5G mobile phone technology, the Internet of Things and “big data,” according to K.C. Swanson, Telecommunications Industry Association director-global policy, in prehearing testimony posted in docket USTR-2018-0026. Though the Office of the U.S. Trade Representative hasn’t released a schedule of witnesses to testify at four days of public hearings on the tariffs beginning Aug. 20, Swanson is scheduled to testify Aug. 21, she said. Requests to testify were due Aug. 13 under the deadline USTR Robert Lighthizer extended from July 27 when he announced Aug. 1 he will “consider,” under President Donald Trump’s direction, raising the third tranche of proposed duties to 25 percent from 10 percent (see 1808010070).
Imports at the major U.S. retail container ports set record highs in June and July and appear poised to set a third in August, the National Retail Federation said in an Aug. 9 news release. It’s all the result of retail sales rising and retailers “rushing to bring merchandise into the country” ahead of the proposed Section 301 tariffs on $200 billion worth of products from China, NRF said. “Tariffs on most consumer products have yet to take effect but retailers appear to be getting prepared before that can happen,” said Jonathan Gold, NRF vice president-supply chain and customs policy. “We’re seeing new record levels every month this summer. Much of that is to meet consumer demand as tax reform and a thriving economy drive retail sales, but part of it seems to be concern over what’s to come. The good news for consumers is that avoiding tariffs holds off price increases that will inevitably come if the reckless and misguided trade war is allowed to continue.” U.S. ports handled 1.85 million 20-foot-long cargo containers or their equivalents in June, a 7.8 percent increase from the same month a year earlier, NRF said, citing its own Global Port Tracker report. It estimates ports handled 1.88 million containers in July, a 4.4 percent increase year-over-year, and forecasts August container imports will be up 4.4 percent to 1.91 million, it said. “The volatility and non-fact-based decisions coming from Washington have created uncertainty" in the retail sector, said Hackett Associates, the contractor that compiled the port-tracking statistics for NRF.
A recent Agriculture Department report lists the specific food and agriculture tariff lines included in planned new Chinese tariffs (see 1808030013). "The supplementary tariffs are primarily on products which had not been previously impacted by the [Sections] 232 and 301 initial retaliatory duties, with the exception of eight [Harmonized System] codes," the USDA said in its Global Agricultural Information Network report. The new tariffs would apply in addition to the previously imposed retaliatory tariffs, it said. The new tariffs were announced in response to proposed U.S. tariffs on $200 billion worth of goods under Section 301 (see 1808010070).
The Office of the United States Trade Representative released the final list for the second tranche of Section 301 tariffs on Aug. 7. CBP will begin the collection an extra 25 percent in tariffs on those goods from China starting Aug. 23, the USTR said in its announcement.
International Trade Today is providing readers with some of the top stories for July 30 - Aug. 3 in case they were missed.
China responded to proposed U.S. tariffs on $200 billion worth of goods under Section 301 with a new tariff threat of its own on Aug. 3. The Chinese Ministry of Commerce announced plans to add tariffs of between 5 percent and 25 percent on 5,207 items, said to account for about $60 billion worth of goods from the U.S. The Office of the U.S. Trade Representative is considering imposing tariffs of 25 percent on $200 billion worth of Chinese goods (see 1808010070). "The US measures have deviated from the consensus of the two sides, leading to an escalation of trade friction between China and the United States, serious violations of relevant rules of the World Trade Organization, and damage to our national interests and people's interests," the Ministry of Commerce said, according to an unofficial translation.
Tariffs "show up as a tax on the consumer and wind up resulting in lower economic growth” that can sometimes bring about "significant risk of unintended consequences,” Apple CEO Tim Cook said in Q&A on the company’s quarterly earnings call on July 31. Several trade agreements “are in need of modernizing,” but in most situations, “tariffs are not the approach to doing that,” Cook said. Risks of macroeconomic issues such as an economic slowdown or currency fluctuations related to tariffs are difficult to quantify, “and we're not even trying to,” Cook said. None of Apple’s products was affected by the U.S. tariff on steel and aluminum, which took effect in June, nor two other Section 301 lists totaling about $50 billion in goods from China that were implemented.
As critics continue ratcheting up their opposition to the Trump administration’s proposed third round of Section 301 tariffs on $200 billion in Chinese imports, it remains to be seen how the Office of the U.S. Trade Representative will accommodate all who have requested to testify in five-minute slots during four days of public hearings scheduled to begin Aug. 20. Well more than 300 people in various industries filed requests in docket USTR-2018-0026 by the July 27 deadline to appear at the hearings, virtually all of them to say they'll testify against the tariffs.