The U.S. summary of a weekend call between U.S. Trade Representative Katherine Tai and China's Vice Premier Liu He, the lead negotiator of the phase one agreement, did not use the word tariffs, though it said the two countries would "consult on certain outstanding issues."
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.
CBP has assessed about $123.5 billion in duties under the major trade remedies started during the Trump administration, as of Oct. 7, according to CBP's trade statistics page. That includes $108 billion in duties from the Section 301 tariffs on goods from China, and $1.1 billion in Section 301 tariffs on goods from the European Union. CBP also has assessed about $8.8 billion under the Section 232 tariffs on steel and $2.7 billion under tariffs on aluminum. The Section 201 trade remedies on washing machines and washing machine parts account for about $277 million and the solar cells tariffs account for $2.7 billion in assessed tariffs.
The following lawsuits were filed at the Court of International Trade during the week of Sept. 27 - Oct. 3:
The Office of the U.S. Trade Representative is seeking comments on whether it should reinstate hundreds of Section 301 product exclusions that expired either late last year or early this year. The public docket at https://comments.USTR.gov will open Oct. 12, and parties can submit comments until Dec. 1. The agency is asking that commenters not only weigh in on specific products, but also on how long the exclusions should last.
The office of the U.S. Trade Representative plans to restart a Section 301 tariff exclusions process, and has no immediate plans to remove any of the Section 301 tariff targets now that its comprehensive China review is over. However, a government official who spoke on background during an Oct. 3 call with reporters said, "We also want to make sure to align existing tariffs to those [Biden-Harris administration] priorities."
The rollout of the new China trade policy looks a lot like the old China policy, with a new chance at Section 301 exclusions and all the tariffs remaining for now. U.S. Trade Representative Katherine Tai suggested during the speech on the results of the China policy review that she doesn't have much hope for getting more structural reform that the phase one China agreement did not secure.
CBP created Harmonized System Update (HSU) 2109 on Sept. 29, containing 477 Automated Broker Interface records and 99 Harmonized Tariff Schedule records, it said in a CSMS message. The update reflects the extended exclusion from Section 301 tariffs on China of headings that cover goods used in treating COVID-19 (see 2109270044). Those headings -- 9903.88.62, 9903.88.63, 9903.88.64 and 9903.88.65 -- will now expire Nov. 14. CBP also issued a guidance on the subject.
Most trade groups and companies that have filed comments so far on extending Section 301 tariff exclusions on COVID-19 pandemic-related imports from China want those tariffs to continue to be waived. Comments were due Sept. 27. The Office of the U.S. Trade Representative announced Sept. 27 that it will temporarily extend the exclusions to Nov. 14, rather than Sept. 30, so that agency employees can have more time to analyze public comments (see 2109270044).
The U.S. Trade Representative will allow a short-term extension for the exclusions on goods used to treat COVID-19 from Section 301 tariffs on goods from China, it said in a notice posted on the agency's website. The exclusions were set to expire Sept. 30, but USTR said it will extend the exclusions for 45 days to give the agency more time to review comments submitted about a longer extension. The exclusions will now expire Nov. 14, it said.
The Office of the U.S. Trade Representative will allow a short-term extension for the exclusions on goods used to treat COVID-19 from Section 301 tariffs on goods from China, it said in a notice posted on the agency's website. The exclusions were set to expire Sept. 30, but USTR said it will extend the exclusions for 45 days to give the agency more time to review comments submitted about a longer extension.