The U.S. will on Oct. 1 raise its existing Section 301 tariffs on the first three lists of $250 billion in imports from China from 25 percent to 30 percent, said President Donald Trump in a series of tweets Aug. 23. The next set of tariffs set to take effect beginning Sept. 1 on $300 billion in imports from China will also be increased from 10 percent to 15 percent, Trump said.
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.
President Donald Trump said in an Aug. 23 tweet that he is planning an unspecified response to new tariffs that China will impose on U.S. goods. China's tariffs are in relation to the coming Section 301 10 percent tariffs on Chinese goods, most of which will begin on Sept. 1. “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” Trump tweeted. “We don’t need China” and the U.S. “would be far better off without them,” he said. “The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP.”
Target remains “mindful of the volatility and uncertainty in the marketplace, including the timing and extent of additional China tariffs,” CEO Brian Cornell said on a Q2 earnings call Aug. 21. Noting that List 4 Section 301 tariffs at 10 percent are set to hit Sept. 1 on apparel, TVs, toys and home goods, Cornell said Target is following developments carefully: “We’re encouraged that many items originally slated for tariff increases in September have now been delayed until later in the year,” he said of the List 4B tariffs deferred until Dec. 15. As long as the trade situation with China “remains fluid,” he said, “it will present an additional layer of uncertainty and complexity as we plan our business.”
U.S. Trade Representative Robert Lighthizer expects Canada's Parliament to continue progress on the U.S.-Mexico-Canada Agreement in the fall following October elections, he said in recently posted written responses to House Ways and Means Committee members following a June 19 hearing (see 1906190062). "The Trudeau government has begun necessary steps to ratify the USMCA in its Parliament and has stated that it plans to move forward on implementation in tandem with the United States," he said. "The Canadian Parliament has adjourned for the summer and is not expected to return before federal elections are held on October 21, 2019. We anticipate that Canada will take up the legislation once a new government is seated later this fall, and we are confident that the Parliament will vote in favor of the Agreement."
International Trade Today is providing readers with some of the top stories for Aug. 12-16 in case they were missed.
TV imports to the U.S. turned sharply more China-centric in the weeks after the Trump administration announced its proposed List 4 Section 301 tariffs on finished sets from China among the roughly $300 billion worth of goods not previously dutied, an analysis of Census Bureau trade statistics found. Observers will debate whether importers’ rush to beat the threatened tariffs played a role in the steep influx of China-sourced TVs arriving in the U.S. during June.
The American Apparel and Footwear Association complained about the tenor of news coverage about Section 301 tariff delays, noting that 77 percent of apparel and textiles will face an additional 10 percent tariff on Sept. 1, not the later December date.
The Office of the U.S. Trade Representative posted to its website Aug. 14 its upcoming notice in the Federal Register detailing new Section 301 tariffs on a fourth list of $300 billion in Chinese imports (see 1908130033). According to the notice, beginning on Sept. 1, goods included in the first group of the list must be filed under subheading 9903.88.15. Then, effective Dec. 15, tariffs take effect on a second list of goods under subheading 9903.88.16.
International Trade Today is providing readers with some of the top stories for Aug. 5-9 in case they were missed.
Of the 140 Harmonized Tariff Schedule subheadings that the Consumer Technology Association urged the Office of the U.S. Trade Representative in its June 17 comments to remove from List 4 Section 301 tariff exposure, the association won 37 deferrals to Dec. 15 in key product areas like smartphones, laptops and tablets and PC monitors when the final lists were released Aug. 13 (see 1908130033). The remaining subheadings face 10 percent tariff exposure when the duties on the newly configured List 4A take effect Sept. 1.