In a Federal Register Notice published on May 22, 2024, the U.S. Trade Representative (USTR) is proposing to (1) increase Section 301 tariffs on certain China-origin products in "strategic sectors," including electric vehicles, lithium-ion batteries, semiconductors, solar cells, steel, aluminum, on-shore cranes, medical products, and critical minerals; (2) maintain the Trump-era Section 301 tariffs on most China-origin products (i.e., those included in List 1, 2, 3, and 4A); (3) implement a tariff exclusion process by which interested persons may request that particular machinery used in domestic manufacturing be temporarily excluded from Section 301 tariffs; and (4) grant temporary exclusions for certain solar manufacturing equipment. 

The Federal Register Notice does not address the 429 tariff exclusions currently set to expire on May 31, 2024. Included on that list are 77 medical products that have been exempted from China tariffs due to the COVID-19 pandemic.

The Federal Register Notice follows the publication of a USTR report on the effectiveness of the Section 301 tariffs in achieving their objectives. USTR concluded that the tariffs have been effective "in encouraging China to take steps toward eliminating the investigated technology transfer-related acts, policies, and practices" as well as in reducing the harm felt by American consumers and companies by China's trade practices. Citing U.S. import data since the imposition of Section 301 tariffs, which shows a significant decrease in China's market share of U.S. imports, USTR added that importers have been incentivized to find alternative, non-China sources for products. Per USTR, the result is a "more diverse and resilient supply chain American producers and consumers." Based on these findings, USTR recommended to the president that the Section 301 tariffs on covered products be maintained and advised adding or increasing section 301 tariffs on certain products in strategic sectors.

The proposed modifications and exclusions to the Section 301 tariffs are listed in the Annexes to the Federal Register Notice. Per the Annexes, the tariff increases would take effect in 2024, 2025, and 2026, depending on the product. USTR 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.

A White House press release explains that the proposed actions seek to counter "China's unfair trade practices" and "are carefully targeted at strategic sectors — the same sectors where the United States is making historic investments under President Biden." The concept was explained in recent episode of the New York Times' "The Daily" podcast as follows: "Biden is using tariffs to build a fortress around American industry so that he can train the troops to fight the clean energy battle with China."

USTR is seeking public comments regarding the proposed modifications and exclusion process. Comments on these proposals are due on June 28, 2024. 

For more information, please contact:

Richard A. Mojica, rmojica@milchev.com, 202-626-1571

Flora J. Pierce, fpierce@milchev.com, 202-626-6058

Aditi Patil, apatil@milchev.com, 202-626-1485

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