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USTR Releases Proposed Tariff List on Chinese Products Under Section 301 Action

Posted April 04, 2018

The Trump administration yesterday released its proposed list of $50 billion in Chinese imports set to be targeted by steep new levies of roughly $12.5 billion as part of its drive to force changes in China’s trade practices related to the coercive transfer of U.S. technology and intellectual property.

“The proposed list of products is based on extensive interagency economic analysis and would target products that benefit from China's industrial plans while minimizing the impact on the U.S. economy,” the office of U.S. Trade Representative Robert Lighthizer said in a statement.

Explaining the latest move that could soon place a 25% tariff on more than 1,300 Chinese products like flat-screen televisions, semiconductors, engines, agricultural and textile machinery, tires, industrial robots, medical devices, aircraft parts and batteries, the USTR said the administration was compelled to take action “in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.” Such policies “bolster China’s stated intention of seizing economic leadership in advanced technology,” claimed the USTR.

Products were excluded from the proposed list if tariffs were “likely to cause disruptions to the U.S. economy” or are “subject to legal or administrative constraints,” according to the USTR. “The remaining products were ranked according to the likely impact on U.S. consumers, based on available trade data involving alternative country sources for each product. The proposed list was then compiled by selecting products from the ranked list with lowest consumer impact,” Lighthizer said in announcing the recommendations.

As expected from earlier warnings, Beijing immediately hit back with countermeasures of its own by announcing additional tariffs designed to target a corresponding $50 billion of U.S. products such as soybeans, cars and whisky. China’s Commerce Ministry said it “strongly condemns and firmly opposes” the proposed new U.S. tariffs and charged the move was made “with disregard to China’s solemn representations and without factual basis,” adding that it was “typical of unilateralism and trade protection” that ignores the voices of industry in both countries and the interests of consumers.

U.S. business groups immediately voiced concern about the potential tariffs and questioned the administration’s approach to resolving longstanding problems with China’s market access, intellectual property rights and technological transfer policies.

“The administration is rightly focused on restoring equity and fairness in our trade relationship with China. However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends,” Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce, said in a statement. “The U.S. Chamber looks forward to working with the administration throughout the comment period to make the business community's voice heard on the U.S.-China economic relationship.”

Information Technology Industry Council president and CEO Dean Garfield predicted that tariffs would backfire and harm the U.S. and consumers. “If history is any indication, these proposed tariffs will not work and will be entirely counterproductive. Tariffs penalize U.S. consumers by increasing prices on technology products and will not change China’s behavior. Instead, the administration should act consistent with international obligations and work with other countries to address systemic issues with China,” he said.

The Trump administration’s new tariffs are slated to go into effect in June following a two-month comment period in which U.S. companies can provide feedback on the USTR’s product choices. Public comments on the recommended tariffs are due May 11 and the government’s Section 301 Committee will hold a public hearing in Washington on May 15. Companies will then have until May 22 to submit any final objections.