The Office of the U.S. Trade Representative (USTR) released a Federal Register notice for the enhanced Section 301 tariffs announced by the Biden administration last week.
On Friday the USTR announced the further extension of certain exclusions in the Section 301 Investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation.
The current 429 product specific exclusions (352 previously reinstated exclusions and
77 COVID-related exclusions) are scheduled to expire on May 31, 2024.
Friday's notice announces a 14-day transition period for all current exclusions, extending them through June 14, 2024, and to extend certain exclusions through May 31, 2025. Friday's Federal Register notice can be viewed here.
Where exclusions were ended, importers failed to convince the USTR that sincere efforts were underway to modify sourcing.
For example, exclusion extentions were de lined where comments indicated that importers had no plans to shift sourcing out of China in 2024 (or at all), or where, despite more than four years of temporary exclusion, commenters reported that they had taken few or no steps to shift sourcing out of China.
This includes comments that, without
further explanation, asserted that they were considering alternative sources, or reported plans to shift sourcing, but failed to adequately explain efforts undertaken or why additional time was needed.
The Trade Representative is proposing adding or increasing section 301 ad valorem rates of duty, as directed by the President, for certain products of China in strategic sectors.
In addition, the Trade Representative is proposing subheadings eligible for an exclusion process by which interested persons may request that particular machinery used in domestic manufacturing be temporarily excluded from section 301 tariffs.
The Trade Representative is also
proposing to modify the actions by granting 19 temporary exclusions for certain solar
manufacturing equipment.
Will Brown of the Aluminum Association notes that while early indications suggested that the tariffs would apply to list 4A and 4B products under Section 301, this week's publication indicates that list 4B products may not be included under the tariff increase.
Unlike Section 301 Lists 1-3, Lists 4A and 4B cover significant quantities of consumer goods from China, including toys and sports equipment, footwear, textiles and clothing, and electronics (in addition to certain intermediate inputs and capital equipment, which were a primary focus of Lists 1-3).
Consistent with the President’s direction to increase section 301 tariff rates on
certain categories of products, included in Annex A to the notice are 382 HTSUS
subheadings and 5 statistical reporting numbers of the HTSUS, with an approximate
annual trade value of $18 billion (2023).
The President has directed that increases for
certain products take effect in 2024, 2025, and 2026. The Trade Representative is
proposing that increases in 2024 be effective August 1, 2024, and that increases in 2025
and 2026 be effective January 1 of the corresponding year.
Trade Representative is establishing an exclusion process by which interested persons may request that particular machinery used in domestic manufacturing and classified within certain subheadings under Chapters 84 and 85 of HTSUS be temporarily excluded from section 301 tariffs.
Finally, to support domestic production and decrease reliance on China in a
strategic sector, the Trade Representative is proposing 19 temporary exclusions for solar
manufacturing equipment. The proposed temporary exclusions are set forth in Annex C to the notice. The proposed exclusions will be effective the date of this notice and
through May 31, 2025.
Docket Number USTR-2024-0007
[FR Notice]. Request for Comments on Proposed Modifications and Machinery Exclusion
Process
[Fridays Notice]. Notice of Extension of Certain Exclusions
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