A number of prominent trade groups, along with Winnebago, the motor home and powerboat maker with 6,000 employees, questioned the wisdom of a tariff hike from 7.5% to 25% on lithium-ion batteries outside the electric vehicle sector (Harmonized Tariff Schedule subheading 8507.60.0020).
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 union request that the government impose a fee on Chinese-made vessels docking at U.S. ports via a Section 301 action confronting subsidization in China's shipbuilding sector (see 2404170029) was mentioned favorably by Democrats and Republicans at a House Select Committee on China hearing that covered Chinese efforts in that sector, semiconductors and drones.
Commerce Secretary Gina Raimondo told the House Energy and Commerce Committee that the content of a rule on connected vehicles made by Chinese companies hasn't been decided yet, but she said the more she learns about the ability for surveillance by advanced cars, the more it scares her.
Almost 20 trade groups and a handful of companies disagreed on how to ensure supply chain resilience -- many arguing that liberalizing trade with allies is crucial to reduce the likelihood of shortages, or weaponization, but others asserted that friendshoring will undermine domestic production already under stress.
CBP created Harmonized System Update (HSU) 2406 on June 12, containing 7 Automated Broker Interface (ABI) records and 2 Harmonized Tariff Schedule records. The update includes an update to the Partner Government Agency (PGA) flag indicator (FD3) for FDA in support of the PGA message set, and it includes new Section 301 exclusions under subheading 9903.88.69 for articles of China that were extended from June 15, 2024, through May 31, 2025.
Sen. James Lankford, R-Okla., told a think tank audience that the U.S. needs to negotiate and Congress needs to ratify new broad trade agreements, so that the U.S. can develop long-term sources of processed minerals needed for electrification.
The following lawsuits were filed at the Court of International Trade during the week of June 3-9:
The Biden administration's proposed Section 301 tariff hikes on various Chinese goods (see 2405220072) would continue to skirt World Trade Organization commitments and strip the global economy of international tribunals, which are key to curbing "persistent protectionism," said George Washington Law School professor Steve Charnovitz in comments on the proposed tariffs.
U.S. importer Water Pik will avoid Section 301 duties on its electromechanical oral hygiene devices from China after arguing that CBP should have classified them under a different Harmonized Tariff Schedule subheading (Water Pik v. United States, CIT # 23-00083).
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