On September 13, 2024, the U.S. Trade Representative (USTR)
announced that it has finalized the modifications to the Section 301 trade actions following the completion of its four-year statutory review in May 2024. As described in a prior
post, on May 22, 2024 USTR released a draft list of imported goods for which it proposed to increase Section 301 duty rates. USTR’s proposal was intended to target “certain products from China in strategic sectors,” including lithium-ion batteries, electronic vehicles, solar power, steel, and aluminum, semiconductors, medical equipment and shipping. USTR also proposed limited exclusions to the Section 301 tariffs for imported equipment dedicated to U.S. manufacturing activity, as well as 19 exclusions for solar panel manufacturing equipment.
Following the release of its proposed list of Section 301 tariff increases, USTR requested comments on whether each targeted product and sector was adequately covered by the proposed list, and whether the rates of additional duty should be higher for certain products. With respect to the proposed exclusions, USTR requested comments on whether the subheadings proposed should be eligible for consideration in the machinery exclusions process, and whether any subheadings were omitted. USTR also requested comment on the scope of the 19 proposed exclusions for solar panel manufacturing equipment.
Products Subject to Additional Section 301 Duties
The final list of products just issued by USTR largely adopts the draft list released in May, with several updates “to strengthen the actions to protect American businesses and workers from China’s unfair trade practices following the review of more than 1,100 comments from the public.” The list is organized as follows:
- Annex A contains an informal table of the tariff increases under the 14 product groups specified by the President and the 382 subheadings and 7 statistical reporting numbers, the tariff rates, and years for tariff increases.
- Annex B contains the 14 temporary exclusions for solar manufacturing equipment.
- Annex C contains the HTSUS modifications to impose additional duties, to increase rates of additional duties, and to exclude certain solar manufacturing equipment from additional duties.
- Annex D contains the Importer Certification for ship-to-shore cranes entering under the exclusion.
- Annex E contains a list of HTSUS subheadings eligible for consideration of temporary exclusion under the machinery exclusion process.
Changes from the proposed list include adding 50 percent tariffs to subheadings 2804.61.00 and 3818.00.00 covering polysilicon and wafers, which are critical for manufacturing solar cells and semiconductors. Other changes from the proposed list include:
- Increasing the 25 percent tariff on facemasks to 50 percent in 2026;
- Increasing the 25 tariff on medical gloves to 50 percent in 2025 and to 100 percent in 2026;
- Increasing the 50 percent tariff on syringes and needles to 100 percent in 2024, but excluding enteral syringes through January 1, 2026; and
- Increasing duties on ship-to-shore cranes in 2024 but allowing for exclusions for cranes that fulfill contracts executed prior to May 14, 2024, and that enter the United States prior to May 14, 2026.
Steel and Aluminum
With respect to steel and aluminum, USTR determined that it is appropriate to use the same scope of products covered by the Section 232 investigations that were defined by Presidential proclamation. See Proclamation 9704 of March 8, 2018 (Adjusting Import of Aluminum into the United States), and Proclamation 9705 of March 8, 2018 (Adjusting Imports of Steel into the United States). After consideration, USTR determined not to increase Section 301 tariffs on subheadings covering upstream and downstream products related to steel and aluminum that are outside the scope of the Section 232 investigations, despite comments urging USTR to impose additional tariffs on these subheadings.
Exclusions
USTR added five additional subheadings that “appear to include machinery used to physically alter goods in the manufacturing process” which are:
- 8421.21.00 (Machinery and apparatus for filtering or purifying water);
- 8421.29.00 (Filtering or purifying machinery and apparatus for liquids, nesoi);
- 8421.39.01 (Filtering or purifying machinery and apparatus for gases, other than intake air filters or catalytic conv. for internal combustion engines);
- 8428.70.00 (Industrial robots); and
- 34 8443.19.30 (Printing machinery, nesoi).
The USTR determined not to add subheadings outside of Chapters 84 and 85 or subheadings that only include parts, accessories, consumables, or general equipment that is unable to physically change a good.
USTR also determined not to adopt five of the 19 proposed exclusions for solar panel manufacturing equipment, for which commenters noted that alternate sources for the machinery were available both domestically and in Europe, and other commenters noted that “excluding Chinese equipment would disincentivize companies to purchase from alternative sources and negatively impact burgeoning supply chains.”
Tariff increases in 2024 take effect on September 27, 2024, although exclusions for solar equipment are retroactive to January 1, 2024 and expire in May 31, 2025.
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