Six Republican and three Democratic senators are urging President Joe Biden "to substantially maintain the tariffs in their current form," though they also said in a letter that exclusions are necessary for importers who cannot buy from elsewhere, but said Biden shouldn't lift or reduce tariff rates, because that would reduce U.S. leverage to address Chinese economic abuses.
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.
As companies work to move assembly out of China so that the goods they export to the U.S. won't be hit with Section 301 tariffs, they have to grapple with the fact that CBP may still consider a good made in Mexico, Malaysia, Vietnam or elsewhere to be a product of China if enough of its innards were made in China.
Greta Peisch, general counsel at the Office of the U.S. Trade Representative, said that the USTR will spell out in an upcoming Federal Register notice what opponents to Section 301 tariffs should address as they critique the effectiveness of the tariffs on the vast majority of imports from China, and what information the office would find useful as they undertake the review of the tariffs.
Although utilities that are installing wind and solar operations and wind turbine manufacturers would like antidumping duty and countervailing duty laws to change to take public interest into account, panelists at Georgetown Law's International Trade Update acknowledged it will probably never happen.
International Trade Today is providing readers with the top stories from last week in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
The following lawsuits were filed at the Court of International Trade during the week of May 9-15:
House Majority Leader Steny Hoyer, D-Md., said he hopes to get "the essence of an agreement" on merging the House and Senate China bills by the end of this month. "I don't mean we're going to have everything agreed to." He said he hopes that each committee delegation can either settle or get very close to finishing their segments by then, though he said some issues will have to be passed up to leadership. "And then I'm hopeful we can get the Competes bill done by the end of next month. That I know is a very ambitious, perhaps naive expectation." He acknowledged there are "real differences" between the two versions.
The AFL-CIO told China bill conferees that renewing Trade Adjustment Assistance, making changes to trade remedies laws, creating outbound investment screening and removing Chinese exports from de minimis eligibility "should be included in any competitiveness package that purports to challenge China's increasing economic dominance."
While the Biden administration faces very little legal constraint to continuing the Section 301 tariffs on the vast majority of Chinese imports, trade experts at the Wiley firm said that the administration is under pressure for a variety of reasons to make a decision on whether they are going to change their approach to the tariffs. So far, the Office of the U.S. Trade Representative has reinstated fewer than 500 exclusions, either due to the COVID-19 pandemic or to a limited review, and has not offered to renew the bulk of the 2,129 exclusions that were granted during the previous administration.
The Biden administration's approach to changing Section 301 tariffs is "a work in progress," said Sarah Bianchi, a deputy U.S. trade representative, while at a May 11 National Council of Textile Organizations conference. Her comments, which avoided directly answering a question of whether the administration position is that tariffs on apparel are not strategic, came a day after President Joe Biden told reporters that administration officials are discussing whether any Section 301 tariffs should be lowered or removed, "and no decision has been made on it."