The Office of the U.S. Trade Representative accepted the Consumer Technology Association’s request for Sage Chandler, vice president-international trade, to testify at the May 15 public hearing in opposition to the Trump administration’s proposed 25 percent tariffs on certain goods imported from China, a CTA spokeswoman said in an email. Of the 1,300 "product lines" in the USTR's list of proposed tariffs, CTA members have so far identified 190 HTS codes representing goods they import from China, and those goods were worth $25 billion last year, Chandler said in comments posted April 25.
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.
Treasury Secretary Steve Mnuchin will lead a delegation to China in a few days to discuss trade issues, including potential Section 301 tariffs, President Donald Trump said during a press conference April 24. Mnuchin, joined by U.S. Trade Representative Robert Lighthizer, will discuss unfair intellectual property rights issues that led the U.S. to propose the 25 percent tariffs under Section 301. Tariffs will be levied "unless we make a trade deal. I think we've got a very good chance of making a deal," Trump said in a meeting earlier in the day.
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The U.S. agreed on April 19 to enter consultations on its Section 232 tariffs on steel and aluminum with the European Union and India. The action follows its announcement April 17 that it would consult with China on the matter. In all cases, the U.S. says the tariffs are not safeguards, as the countries allege, and that they are not subject to World Trade Organization dispute settlement because they are matters of national security.
The Trump administration’s imposition of 25 percent tariffs on TVs sourced from China (see 1804040019) would cause shipments of those sets to decline 2.1 percent and raise consumer pricing 23 percent, according to a new report released by industry groups. The survey report, released April 17, was prepared by Trade Partnership Worldwide for the Consumer Technology Association and the National Retail Federation, both of which vehemently oppose the tariffs. The Section 301 tariffs, which aren't yet in effect, would likely have a major impact on TVs from China (see 1804090008).
The slew of trade remedies "changes everything" for importers, making programs like drawback and foreign-trade zones more valuable to companies that previously didn't need to consider such options, said Amie Ahanchian, KPMG managing director, Trade and Customs Services, during an April 16 KPMG webinar. Of the 1,333 tariff lines on the Section 301 list (see 1804040019), about 60 percent, or around 800 line items, are duty-free today, she said. That means "if you're importing these items, you may not have ever considered a customs planning strategy because there were no duties to mitigate in the current trade environment," she said.
Misclassification and valuation are among areas of enforcement focus for CBP's administration of the Section 232 tariffs on steel and aluminum, CBP officials said during an April 10 interview. "Classification is a way to play with it, valuation as well, but these are things we will have to look at," said John Leonard, executive director of trade policy and programs at CBP. There are some different considerations involved for looking at possible transshipments because most antidumping or countervailing duty evasions involve countries around China, such as Malaysia or Thailand, but those countries are affected by the 232 tariffs too, he said. "It's hard to put it in that same context," he said.
Sen. Chuck Grassley, R-Iowa, represents a state that exports lots of soybeans to China but remains critical of the U.S.'s largest trading partner in goods. He said he recently visited five cities in China with Agriculture Secretary Sonny Perdue and other senators. What he saw there convinced him that Chinese officials "will do anything legal or illegal, moral or immoral, ethical or unethical ... to get ahead and stay ahead." He added, "They are very strategic and we're very short-sighted." Grassley, speaking at a Senate Finance trade subcommittee hearing April 11 on access to China's market, said he's one of the only Congress members still in office who voted to allow China full membership in the World Trade Organization. "It hasn't turned out the way I anticipated," he said. "I kind of feel like I should feel sorry for my vote."
A court challenge of any Section 301 tariffs imposed on China would be possible, but difficult, according to a Congressional Research Service report dated March 29. The Court of International Trade does have jurisdiction over Section 301 duties under 18 USC 1581(i), and has heard several cases on past Section 301 actions, the report said. But the challenger must clear a high bar to succeed, it said. Because Section 301 actions involve trade negotiations, the U.S. trade representative is given much deference by the court, possibly rendering USTR’s actions unreviewable under the Administrative Procedures Act, CRS said. “Because Section 301 investigations involve consultations with other countries and other foreign relations-related issues, a degree of discretion is afforded to the actions the USTR takes,” the report said. “What remains open to challenge before the courts, however, are allegations of statutory misinterpretations on the part of the USTR, violations of the statute’s procedures, actions that exceed the authority delegated to the USTR by statute, and similar claims,” it said.
International Trade Today is providing readers with some of the top stories for April 2-6 in case they were missed.