Imports from China Face Additional Tariff Increases Under Section 301

Trade Update • May 15, 2024

.S. Trade Representative Katherine Tai has announced new measures regarding tariffs on Chinese products following a thorough review of the Section 301 investigation into China’s trade practices. These actions aim to address China’s unfair policies related to technology transfer, intellectual property, and innovation that harm U.S. businesses and workers.

Key Points

• President Biden’s Directive: After reviewing the statutory report on Section 301 tariffs, President Biden has directed Ambassador Tai to take further action to address China’s harmful technology transfer-related practices. While the tariffs have encouraged China to make some changes, further action is deemed necessary.

• Proposed Tariff Modifications: The USTR will maintain all existing Section 301 tariffs on Chinese goods and to add or increase tariffs on the following imported products:

• Battery parts (non-lithium-ion batteries): Increase to 25% in 2024
• Electric vehicles: Increase to 100% in 2024
• Facemasks: Increase to 25% in 2024
• Lithium-ion electrical vehicle batteries: Increase to 25% in 2024
• Lithium-ion non-electrical vehicle batteries: Increase to 25% in 2026
• Medical gloves: Increase to 25% in 2026
• Natural graphite: Increase to 25% in 2026
• Permanent Magnets: Increase to 25% in 2026
• Other critical minerals: Increase to 25% in 2024
• Semiconductors: Increase to 50% in 2025
• Ship to shore cranes: Increase to 25% in 2024
• Solar cells (whether or not assembled into modules): Increase to 50% in 2024
• Steel and aluminum products: Increase to 25% in 2024
• Syringes and needles: Increase to 50% in 2024

• Additional Recommendations: The report also suggests establishing an exclusion process for machinery used in domestic manufacturing, particularly for solar manufacturing equipment, and allocating more funds to U.S. Customs and Border Protection for better enforcement of Section 301 actions. It also emphasizes the importance of cooperation between private companies and government authorities to combat technology theft and support supply chain diversification.

Background

• Four-Year Review: In May 2022, USTR began the four-year review process, notifying domestic industries of the possible termination of tariff actions and inviting requests for continuation. Due to the requests received, the tariff actions were not terminated, and a detailed review was conducted. Nearly 1,500 comments were received from interested parties.

• Findings: The review found that while the tariffs have led China to make some changes, many unfair practices persist. Economic analyses show small negative effects on the U.S. economy but positive impacts on production in key sectors. The tariffs have also encouraged supply chain diversification, reducing reliance on Chinese imports.

Next Steps

• Public Comment: The USTR will issue a Federal Register notice next week to invite public comments on the proposed tariff modifications and the exclusion process for domestic manufacturing machinery.

Ambassador Tai reiterated her commitment to using all available tools to promote American jobs and investments while addressing the challenges posed by China’s trade practices. The new measures aim to strengthen U.S. economic resilience and ensure fair trade practices.

Questions or concerns about if your products are affected please contact us.