May 03, 2022

USTR Sets the Stage for its Reassessment of Section 301 Tariffs on Chinese-Origin Goods

In a highly anticipated development, on May 3, 2022, the United States Trade Representative (USTR) announced the initiation of a statutory process whereby USTR is expected to conduct a reassessment of the existing Section 301 tariffs on certain Chinese-origin goods.

Per USTR’s draft notice to be published in the Federal Register, if USTR receives a “request for continuation” of the existing Section 301 tariffs within the next 60 days — which is highly probable — the agency will promulgate a review process whereby importers and other interested parties will have the opportunity to provide public comments on the effectiveness and proposed continuation of the Section 301 tariffs. 

Background

The Section 301 statute provides that any action taken under Section 301 automatically expires after four years, unless a petitioner or representative of the domestic industry benefitting from the action submits to USTR a written request for the continuation of the action during the last 60 days of the four-year period. 19 U.S.C. § 2417(c).

If a request for continuation is submitted, USTR is then required to conduct a review to consider (1) the effectiveness of the Section 301 action in achieving statutory goals; (2) other actions that could be taken in lieu of the current Section 301 action; and (3) the effects of the existing Section 301 action (or alternatives in lieu of) on the U.S. economy, including consumers.

On July 6, 2018, and August 23, 2018, respectively, USTR imposed two separate tariff actions on Chinese-origin goods (i.e., the imposition of the so-called “List 1” and “List 2” tariffs); followed by modifications of the original tariffs’ actions (i.e., the imposition of the so-called “List 3” and “List 4” tariffs). As such, the Section 301 tariffs, which include the tariffs imposed under Lists 1, 2, 3, and 4A are slated to expire (i.e., sunset) on July 6, 2022, and August 23, 2022, respectively, absent the submission of a request for continuation. 

USTR’s Notice

USTR’s draft notice solicits “requests for continuation” from any “representatives of domestic industries which benefit” from the Section 301 tariffs and would like to see them continue. Importantly, per the Notice, USTR is deeming the tariffs imposed under Lists 3 and 4A as “modifications” of the List 1 and List 2 actions, and therefore, the draft notice encompasses all of the Section 301 tariffs on Chinese-origin goods. 

According to USTR, following the 60-day windows provided for the submission of continuation requests — May 7-July 5, 2022, for the first Section 301 action and June 24-August 22, 2022, for the second Section 301 action, USTR (presuming it receives a request for continuation from a representative of a domestic industry which benefits from an action) will issue a notice announcing:

  1. The continuation of the Section 301 tariffs.
  2. The launch of a statutory review of the Section 301 tariffs, whereby USTR intends to open a “separate portal” for interested persons to “submit comments on, among other matters, the effectiveness of the action in achieving the objectives of Section 301, other actions that could be taken, and the effects of such actions on the United States economy, including consumers.”

Next Steps for Importers and Stakeholders

The anticipated comment period and follow-up USTR assessment will provide importers and other companies affected by the Section 301 tariffs with an opportunity to argue in favor of narrowing the scope of the existing Section 301 tariffs by proposing the exclusion of certain imported Chinese-origin products that are (1) critical to U.S. consumers and businesses and/or (2) unavailable (at least from a practical perspective) outside of China.

In light of recent comments made by high-ranking administration officials, including USTR Katherine Tai and Treasury Secretary Janet Yellen and activities on pending Senate and House trade legislation, there appears to be some momentum for potential mitigation of the existing Section 301 tariffs as a means of addressing, in part, U.S. consumer concerns surrounding inflation. 

For More Information

Faegre Drinker has assisted numerous clients seeking relief from the Section 301 tariffs on Chinese-origin goods, including through the submission of public comments and product exclusion requests. If you wish to submit public comments in relation to USTR’s upcoming statutory review of the Section 301 tariffs or have any questions regarding the USTR’s notice, please contact any member of the Faegre Drinker Customs and International Trade Team for further details.

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