On May 22, 2024, the United States Trade Representative (“USTR”) published details regarding proposed increases in Section 301 tariffs on imports from China following the results of its statutorily required four-year review of the Section 301 tariff actions. (For additional background on the Section 301 investigation and relevant Chinese practices, please see one of our earlier Section 301 alerts).
Based on the findings and the recommendations of USTR, President Biden issued a Memorandum which directed USTR to “maintain…the ad valorem rates of duty and lists of products subject to the [actions] taken under the section 301 investigation” and to “modify the two actions to increase section 301 ad valorem rates of duty” for the following products[1]:
| Sector Category | Proposed Changes |
| Non-lithium-ion Battery Parts | Increase rate to 25% on August 1, 2024 |
| Electric Vehicles | Increase rate to 100% on August 1, 2024 |
| Facemasks | Increase rate to 25% on August 1, 2024 |
| Lithium-ion Electrical Vehicle Batteries | Increase rate to 25% on August 1, 2024 |
| Lithium-ion Non-electrical Vehicle Batteries | Increase rate to 25% on January 1, 2026 |
| Medical Gloves | Increase rate to 25% on January 1, 2026 |
| Natural Graphite | Increase rate to 25% on January 1, 2026 |
| Other Critical Minerals | Increase rate to 25% on August 1, 2024 |
| Permanent Magnets | Increase rate to 25% on January 1, 2026 |
| Semiconductors | Increase rate to 50% on January 1, 2025 |
| Ship-to-Shore Cranes | Increase rate to 25% on August 1, 2024 |
| Solar Cells (whether or not assembled into modules) | Increase rate to 50% on August 1, 2024 |
| Steel and Aluminum Products | Increase rate to 25% on August 1, 2024 |
| Syringes and Needles | Increase rate to 50% on August 1, 2024 |
New exclusion processes for industrial machinery
The Memorandum directed USTR to establish a process by which interested persons can request temporary exclusions from Section 301 tariffs for particular machinery used in domestic manufacturing classified within a subheading under chapters 84 and 85 of the Harmonized Tariff Schedule of the United States (HTSUS).[2] Procedures for these exclusions will be forthcoming, and exclusions granted through this process will be effective through May 31, 2025.
Solar manufacturing equipment exclusion
The USTR has also proposed 19 tariff exclusions for certain solar manufacturing equipment. The exclusions are based on product description instead of HTS codes and can be found in Annex C of the Notice, and products are all within HTS 8486.10.0000, 8486.20.0000, and 8486.40.0030. Exclusions on these 19 items are effective upon the date of the Notice and will continue through May 31, 2025.[3]
Request for public comments
USTR invites comments from interested persons in accordance with section 307(a)(2) of the Trade Act (19 U.S.C. 2417(a)(2)). With respect to the proposed modifications for adding or increasing Section 301 tariff rates on certain products from China, interested persons are invited to comment on the effectiveness of the modifications in eliminating or counteracting China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation; the effects on the U.S. economy, including consumers; and whether the tariff subheadings identified for each product and sector adequately cover the products and sectors including in the President’s direction to the USTR.
With respect to the exclusion process, USTR seeks comments on whether the subheadings listed in Annex B should be eligible for consideration in the machinery exclusion process and whether Annex B omits certain subheadings under Chapters 84 and 85 that cover machinery used in domestic manufacturing and should be included. With respect to the proposed solar manufacturing machinery exclusions, USTR request comments on the scope of each exclusion, including any suggested amendments to the product description.
The USTR intends to post a copy of questions for the docket by May 24, 2024. Comments can be submitted between May 29, 2024 and June 28, 2024.
If you are interested in submitting comments, please contact Eric Emerson at eemerson@steptoe.com or Judy Wang at zwang@steptoe.com.
[1] A full list of HTSUS subheadings can be found in Annex A of the Request for Comments notice.
[2] A full list of HTSUS Subheadings eligible for considerations of temporary exclusion can be found in Annex B of the Request for Comments notice.
[3] The list of proposed temporary exclusions can be found in Annex C of the Request for Comments notice.