Coming Fall 2023: The USTR Says a Section 301 Review is Imminent

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Jul. 24, 2023
By: Hannah B. Kreinik

The statutorily required 4-year review of Section 301 tariffs is underway. Katherine Tai, the U.S. Trade Representative, confirmed that the Section 301 duties, otherwise known as the China duties, will be investigated during the review for its success or failure in meeting its original purpose. The objective of the Section 301 tariffs was to limit Chinese importation, and thus benefit U.S. manufacturing. The Section 301 duties are now in the hot seat as the USTR prepares to complete its review.

Tai stated that the USTR would be taking a holistic look at the effect the tariffs have had on the national economy, specifically U.S. customers, businesses, and production. The USTR wants to focus on analyzing the current structure of the tariffs, as well as any changes that should be explored.

Tai received multiple questions at the Senate Finance Committee hearing last March regarding the multiple exclusions under the Section 301 tariffs. Chairman Ron Wyden, a senator from Oregon, questioned the exclusion process currently in place, and if any more exclusions would be resumed. Senator John Barrasso from Wyoming also inquired into the recommencing of the exclusion process. The USTR received various comments on the exclusion process and potential modifications that may be pursued to increase its effectiveness. Section 301 exclusions have been used immensely by the effected industries, and amendments to the exclusion process would likely influence these exclusions.

The USTR did reveal some interesting statistics that demonstrated a benefit to domestic firms in semiconductor and furniture industries. Tai mentioned that there was a drop of over 70% in imports of semiconductors from China. The International Trade Commission (“ITC”) also found that U.S. manufacturing of cabinets and other furniture items had increased 7.5% since the implementation of Section 301 duties.

Senators at the hearing also asked about retroactivity of the Section 301 tariffs during their questioning. Tai provided the response to these inquiries but referred the committee to the pending Section 301 litigation. Retroactivity of the 301 tariffs is one of the issues currently before the court.

There were concerns of how and when the USTR would include the USMCA Dispute Settlement Panel’s recent opinion on automotive origin and regional value issues. Tai said that discussions with Canada, Mexico, and the US were in progress to find a solution for the Settlement Panel’s decision.

Tai also responded to questions on the Global Arrangement on Sustainable Steel and Aluminum. Senator Mike Crapo from Idaho inquired into the USTR’s future policy for adhering to the agreement and implementing carbon testing on steel and aluminum. Tai focused on the emissions data currently available and reported that more emissions data would be necessary to determine their ultimate implementation approach in consultation with the European Union.

Many senators were also concerned with the USTR’s involvement in the Central America Free Trade Agreement-Dominican Republic (“CAFTA-DR”) and the UK free trade agreements. Tai explained that the social uprisings, violence, and failure in education and infrastructure were some of the issues that obstructed the CAFTA-DR from accomplishing the trade and prosperity goals the agreement was created to promote. Specifically, Tai emphasized the apparel industry and its policy challenges to the USTR’s hesitation on trade assistance in the region. Tai also commented on continued trade discussions with the UK, and the developments being made in the US-UK Trade Dialogues.

Finally, Tai talked about the USTR’s initiatives for promoting US exports, like agricultural products. India has concluded its tariffs against US imported agricultural goods and eliminated its food safety requirements against products like US pecans and pork. Tai discussed that the USTR is currently seeking trade relationships in the Indo-Pacific region, as well as with Taiwan and Kenya.

Here at Barnes, Richardson & Colburn, our attorneys are willing and ready to help your company through the maze of USTR Section 301 tariffs and pending review. We can also aid in the application of free trade agreements for your product.