Section 301 of the Commerce Act of 1974 authorizes the President to take all appropriate action, not only tariff but also non-tariff retaliation, to remedy any unfair act, policy or practice of a foreign government affecting the United States trade.

The U.S. Trade Representative (USTR) has imposed four rounds of tariffs on Chinese-origin goods following its Section 301 investigation into technology transfer, intellectual property, and policies and practices related innovation from China.

Prior to the Trump administration, the United States used Section 301 clearance primarily to make cases before the World Trade Organization (WTO), but the Trump administration has used it to justify unilateral actions in the purpose of solving the problems faced by disadvantaged American companies due to certain unjustifiable or unreasonable Chinese business practices.

Previously, tariffs ranging from 7.5% to 25% were imposed on approximately $370 billion of annual U.S. imports from China in 2018. These tariffs were divided into two stages:

  • Tariffs on List 1 goods ($34 billion) took effect July 6, 2018

  • Tariffs on List 2 goods ($16 billion) took effect August 23, 2018

  • Additional rounds of tariffs on List 3 goods ($200 billion) and List 4A goods ($126 billion) were subsequently imposed, which took effect on September 24, 2018 and on September 1, 2019 respectively.

President Biden’s Trade Policy and Recent USTR Announcement

The USTR’s Section 301 investigation and ensuing tariff actions provided leverage for the Trump administration to sign a Phase One trade deal with China in January 2020, which included a commitment to China to increase the import of various American products and services by no less than 200 billion dollars for the next two years.

During the transition of the presidency, President Biden hired Katherine Tai as U.S. Trade Representative. In taking on this role, she inherited ongoing tariffs and half-completed investigations undertaken by her predecessor. No substantive changes have yet been made to the US-China trade policy opening statement to defend against market-disrupting practices by China.

On May 3, 2022, the Office of the USTR announced a process to review the extension of Section 301 tariffs against Chinese goods, pursuant to a provision that requires these tariffs to expire on the fourth anniversary of their imposition. (6 July 2022 and 23 August 2022), unless the national beneficiaries of the tariffs request their extension.

There is now strong interest in the changes that could result from the USTR’s statutory review, as there is demand for lower tariffs on Chinese goods to deal with record inflation and rising prices. other issues, as well as a need to step up pressure on China to fulfill trade obligations, including buying more American goods under the phase one deal.

Facts about this quadrennial review

Below are the main parts of the USTR examination, which are likely to be of interest and importance to a wide range of entities involved in the trade of goods of Chinese origin.

Scope. All tariff actions in Lists 1, 2, 3 and 4A will be reviewed as part of this statutory review. In addition, the USTR clarifies that two other changes to actions in Lists 1 and 2 are: 1) product exclusions to address the COVID pandemic and 2) certain reinstated exclusions that would be covered. This means that related parties are invited to comment on the maintenance of China’s four tariff schedules and the following changes currently in effect.

Chronology. The first phase of the review process is primarily aimed at domestic parties benefiting from these Section 301 tariffs. Any representative of a domestic industry that benefits from either of the two actions comprising List 1 and List 2, as modified by Lists 3 and 4A and the aforementioned product exclusions, may submit a continuation request using the relevant Tariff Action Portal at , according to the following schedule:

  • List 1 Action (as amended): May 7, 2022 ~ July 5, 2022

  • List 2 Action (as amended): June 24, 2022 ~ August 22, 2022

In the second phase of the review, the USTR will announce whether it has received a continuation request from a representative of a domestic industry that benefits from China’s Section 301 tariffs. If the USTR receives such a request, it will announce the continuation of the action and initiate a review of the action. The USTR will then open a separate portal for interested persons to submit comments on, among other things, the effectiveness of the actions in achieving Sections 301 objectives, other actions that might be taken, and the effects of those actions on the US economy, including consumers.

This part of the review would likely allow various interested persons and entities, including importers of goods of Chinese origin, to seek the elimination and/or modification of Section 301 duties on particular goods. The USTR has not announced precisely when it will initiate or conclude this comment procedure, or when it will reflect any resulting tariff changes.

In order to respond in a timely manner to these uncertainties, interested persons or entities, such as importers who wish to eliminate or reduce tariff charges, should consider checking the status of the first phase of examination and prepare their opinions. and supporting data.

Stand up to participate and other gray areas

As prescribed in Section 307(c) of the Commerce Act, the USTR notes that List 1 and List 2 actions under Section 301, as amended, will terminate on their dates. four-year anniversaries (i.e. July 6 and August 23). , 2022, respectively) unless a representative of the domestic industry that benefits from the customs duties during the last 60 days of such four-year period submits a written request for the continuation of the customs duties.

Yet the notice does not provide a clear answer as to how the USTR will determine whether an entity or person is a representative of a domestic industry benefiting from the tariffs and has standing to seek continuation. The notice also does not specify whether the review could result in the continuation or removal of the entire Section 301 tariff or only certain tariffs discussed in the comment procedure.

Relevant environment and impacts on US-China trade

This four-year statutory review of China’s Section 301 tariffs provides the Biden administration with an opportunity to examine the economic effect of the current tariff barrier on Chinese-origin products and rethink U.S. trade policies. Chinese.

While there has been no definitive comment on the removal of tariffs or a specific timeline for a final decision, it seems clear that the Biden administration will conduct a comprehensive review, not only addressing the practices China’s unjustifiable trade that led to the imposition of the Section 301. tariff initially, but also given the overall impact of the tariff on prices amid a high level of inflation triggered by the disruption post-COVID of global supply chains, Russia’s invasion of Ukraine, among others such as national security, industrial policy and national development.

Overall, this will be a complicated decision for the Biden administration. Eliminating tariffs could dampen inflation and benefit US consumers and import-related businesses. Although it may also harm the price competitiveness of domestic producers, weaken US influence over the bilateral trade agreement with China, and challenge China’s engagement in Russia-related issues.

Importers and others affected by these tariffs should consider filing written comments.

Soyoung Yang also contributed to this article. Soyoung is a lawyer at Barnes & Thornburg.