Congressional Research Service Section 301 Report Notes Temporary Nature of Tariffs
With President-elect Joe Biden said to be reluctant to commit to changing 25% tariffs on $250 million worth of imports from China, a recent Congressional Research Service report contains suggestions that could point to a possible off-ramp. The report, released Nov. 23, says that Section 301 actions terminate automatically after four years, unless the Office of the U.S. Trade Representative receives a request for continuation, and conducts a review that determines the tariffs should continue.
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For the first tranche of tariffs, the four-year date would be in July 2022. For the goods taxed at 7.5%, the four-year date would be in September 2023.
If the USTR is able to complete the Section 301 investigations into Vietnamese currency and timber harvesting (see 2011240004) before Jan. 19 -- all comments must have been submitted by Jan. 8 -- the law gives no flexibility on the punishment. “Mandatory action is required if the USTR concludes that there is a trade agreement violation or that an act, policy, or practice of a foreign government is 'unjustifiable' and 'burdens or restricts' U.S. commerce,” the report notes, and the USTR must give preference to tariffs if the conclusion is that Vietnam is restricting imports from the U.S. by its practices. However, the president could determine that Vietnam has changed its practices and drop the tariffs promptly. In the last 301 tariff case before the Trump administration took office, the U.S. imposed tariffs on Canadian goods because of the softwood lumber dispute. Those tariffs ended in 2010.
“While some Members applaud the Administration’s Section 301 actions or call for more active use of trade authorities, others have decried such unilateral actions as an undesirable shift in U.S. trade policy. Congress could consider amending Section 301 to require greater consultation or approval before a President takes new trade actions, or to establish a formal product exclusion process,” the report said. “Congress could also request an economic impact study of how such actions may affect the U.S. economy, global supply chains, and the multilateral trade system.”