USTR to Take Further Actions on China 301 Tariffs

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And just like that, the Biden Administration has reengaged in the China Tariff War. With yesterday's announcement of significant tariff increases in key sectors, the Administration is putting special attention on protecting the U.S.’s fledgling EV industry. While the Administration has recently been saber-rattling about Chinese-made electric vehicles, there was little indication that battery components were on the chopping block. This was especially true after the Administration took such significant steps to weed out Chinese suppliers in the recent rules that define the Inflation Reduction Act’s (IRA) tax credits. In fact, some might argue that the policy behind the final IRA’s rules is inconsistent with this most recent announcement on tariffs. And, if the IRA’s final rules did not already hamper the U.S.’s push towards electrification, yesterday'stariff announcement will certainly have a chilling effect on supply chains and the costs of EVs in the U.S. in the near future.

As we reported in May 2022, the Office of the United States Trade Representative (USTR) commenced the statutory four-year review of China 301 tariffs. Just a few short weeks ago, the USTR was under attack from members of Congress over the Administration’s lack of action on tariffs. That all changed yesterday, as Trade Representative Katherine Tai announced that under the direction of President Biden, further actions are required to “encourage the elimination of the People’s Republic of China’s unfair technology transfer-related policies and practices.” This decision came at the end of President Biden’s first term, when, for the past three years, the Administration seemed content with leaving the status quo on China with respect to tariffs. This comes at a time when, in recent weeks, President Trump threatened 60% or greater tariffs on all Chinese goods if re-elected.

Specifically, the Trade Representative has recommended that products from China that are currently subject to Section 301 tariffs should remain.

Product List

Current Section 301 Tariffs

List 1, effective July 6, 2018

25%

List 2, effective August 23, 2018

25%

List 3, effective May 10, 2019

25%

List 4, effective February 14, 2020

7.5%

In addition, President Biden has directed USTR to take action to increase tariffs across “strategic sectors,” such as steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products. Specifically, the Trade Representative is proposing to modify in the following strategic sectors:

Battery parts (non-lithium-ion batteries)

Increase rate to 25% in 2024

Electric vehicles

Increase rate to 100% in 2024

Facemasks

Increase rate to 25% in 2024

Lithium-ion electrical vehicle batteries

Increase rate to 25% in 2024

Lithium-ion non-electrical vehicle batteries

Increase rate to 25% in 2026

Medical gloves

Increase rate to 25% in 2026

Natural graphite

Increase rate to 25% in 2026

Other critical minerals

Increase rate to 25% in 2024

Permanent magnets

Increase rate to 25% in 2026

Semiconductors

Increase rate to 50% in 2025

Ship to shore cranes

Increase rate to 25% in 2024

Solar cells (whether or not assembled into modules)

Increase rate to 50% in 2024

Steel and aluminum products

Increase rate to 25% in 2024

Syringes and needles

Increase rate to 50% in 2024

The Trade Representative also proposes to establish an exclusion process targeting machinery used in domestic manufacturing. According to USTR’s report, “the proposed exclusion process will be limited to machinery under certain 8-digit tariff lines in Chapter 84 and Chapter 85 of the HTSUS.” The Trade Representative is also proposing 19 temporary exclusions for certain solar manufacturing equipment.

According to Ambassador Tai, USTR will issue a Federal Register notice next week announcing the proposed modification and exclusion process. Until this notice has been released, the impact on specific imported products has not been identified.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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