Further China Tariff Increases Likely
A mandatory review of the Section 301 tariffs on imports from China concluded May 14 with recommendations to increase some tariffs on $18 billion worth of Chinese goods, establish an exclusion process for a limited number of products, and make other changes.
A Federal Register notice soliciting comments on the proposed changes is expected next week.
The recommendations are included in the Office of the U.S. Trade Representative’s report on its review of the tariffs, which were first imposed in 2018 in an effort to persuade China to modify its “harmful technology transfer-related acts, policies, and practices.”
USTR Katherine Tai said that while the tariffs have been somewhat successful in that regard, “further action is required.”
USTR also downplayed the impact of the tariffs on U.S. businesses, saying they have had small negative effects on U.S. economic welfare, prices, and employment and that these impacts are “particularly associated” with China’s retaliatory tariffs on U.S. exports.
In fact, USTR asserted, the tariffs have helped to increase U.S. production in the most-affected industrial sectors, reduce imports from China, and increase imports from alternate sources, “thereby potentially supporting U.S. supply chain diversification and resilience.”
USTR is therefore proposing to maintain all existing Section 301 tariffs on Chinese goods and to add or increase tariffs on the following products.
– Battery parts (non-lithium-ion batteries) – from 7.5 percent to 25 percent in 202
– Electric vehicles – from 25 percent to 100 percent in 2024
– Lithium-ion electrical vehicle batteries – from 7.5 percent to 25 percent in 2024
– Lithium-ion non-electrical vehicle batteries – from 7.5 percent to 25 percent in 2026
– Medical gloves – from 7.5 percent to 25 percent in 2026
– Natural graphite – from 0 to 25 percent in 2026
– Other critical minerals – from 0 to 25 percent in 2024
– Permanent magnets – from 0 to 25 percent in 2026
– Personal protective equipment – from 0-7.5 percent to 25 percent in 2024
– Semiconductors – from 25 percent to 50 percent by 2025
– Ship-to-shore cranes – from 0 to 25 percent in 2024
– Solar cells (whether or not assembled into modules) – from 25 percent to 50 percent in 2024
– Steel and aluminum products – from 0-7.5 percent to 25 percent in 2024
– Syringes and needles – from 0 to 50 percent in 2024
USTR is also recommending (1) an exclusion process limited to machinery used in domestic manufacturing provided for under specified eight-digit HTSUS numbers (see appendix K in the USTR report), (2) temporary exclusions for certain solar manufacturing equipment (see appendix L), (3) allocating additional funds to U.S. Customs and Border Protection for greater enforcement of Section 301 tariffs, (4) greater collaboration and cooperation between private companies and government authorities to combat state-sponsored technology theft, and (5) continuing to assess approaches to support diversification of supply chains to enhance supply chain resilience.
USTR’s announcement did not include any information on the May 31 expiration of hundreds of tariff exclusions.
Importers of goods subject to the proposed tariff increases should contact ST&R to discuss options for avoiding or ameliorating those higher costs. ST&R can also help importers of machinery that may be eligible for new tariff exclusions to navigate that process. For more information on these or other topics related to the Section 301 tariffs, please contact your ST&R professional or via this email.
