Former President Donald Trump said last week that he might put not just a blanket 10% tariff on imports from countries other than China, but 20% tariffs, at least on "foreign countries that have been ripping us off for years" (see 2408140058).
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.
The Coalition for a Prosperous America, which advocates for protecting American manufacturing, said the new Senate Finance Committee bill to restrict de minimis moves "things in the right direction," even more than the bill that passed the House Ways and Means Committee in the spring.
The nonpartisan Congressional Budget Office has projected that applying Section 301 tariffs to the contents of packages that previously benefited from de minimis, as proposed in the House (see 2407080049), would increase revenue from tariffs by about $23.5 billion in the 2024-2034 period, but would only require reprogramming of ACE and more money for data storage and ACE maintenance, not new CBP officers. The CBO estimated that improving ACE would cost $3 million, and that CBP would need $2 million annually to maintain the system.
The following lawsuits were filed at the Court of International Trade during the week of July 29 - Aug. 4:
Senate Finance Committee Chairman Ron Wyden, D-Ore., is sharing draft text with the trade of a bill that would remove goods subject to Section 301 tariffs from the de minimis entry lane, along with any categories deemed "import sensitive" in the Generalized System of Preferences benefits program legislation.
Sen. Chuck Grassley, R-Iowa, who has traditionally been a defender of the current law on de minimis (see 1907300048), said that while he's not up for lowering the $800 threshold, he would be willing to change the low value import process to combat fentanyl, as the White House is proposing.
The following lawsuits were filed at the Court of International Trade during the week of July 22-28:
Higher or new Section 301 tariffs on lithium-ion batteries for EVs, lead-acid battery parts, golf-cart like EVs, electric cars, vans and buses, plug-in hybrids, ship-to-shore cranes, solar cells, solar panels, syringes, needles, three categories of disposable masks, 26 critical minerals, more than 100 HTS codes covering iron and steel products, and 31 aluminum HTS codes, all on imports from China, will not go up on Aug. 1, as originally announced two months ago (see 2405220072).
The following lawsuits were filed at the Court of International Trade during the weeks of July 8-14 and 15-21:
Revenue from a 10% tariff on all U.S. imports could be offset by a tax cut, and together the two could result in an increase in incomes that would more than offset inflation caused by the tariff hike, according to an analysis released by the Coalition for a Prosperous America on July 24.