We help clients shape the future by specializing at the intersection of business and government. As a national firm, we provide comprehensive government affairs, corporate advisory, and strategic public relations services designed to support organizations navigating complex environments.

Home | Michael Best Strategies

core/heading

Section 301 tariffs on China to continue and expand: USTR concluded its statutory review by determining that existing Section 301 tariffs on Chinese imports will remain in place, with significant tariff increases planned for targeted strategic sectors.

core/list-item

Higher tariffs phased in across key industries: Tariff increases of 25% to 100% will be applied between 2024 and 2026 to products including electric vehicles, batteries, semiconductors, steel and aluminum, solar cells, medical products, and critical minerals.

China’s practices remain a central concern: USTR found that China continues to engage in technology‑transfer and related practices that burden U.S. commerce, concluding that tariffs remain a necessary tool despite mixed broader economic impacts.

New exclusion process and enforcement focus announced: The review recommends a limited exclusion process for certain domestic manufacturing machinery, increased funding for CBP enforcement, and additional efforts to diversify supply chains away from China.

core/list

core/group

Today, The Office of the United States Trade Representative&nbsp;<a href="https://url.us.m.mimecastprotect.com/s/wKgeCG6wODhO7Ev2uKBvjL?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noreferrer noopener">announced</a>&nbsp;the long-awaited results of the Section 301 tariff statutory review, following congressional and industry pressure. The White House&nbsp;<a href="https://url.us.m.mimecastprotect.com/s/MN99CJ6EgJhAJlNgsGlUjc?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noreferrer noopener">fact sheet</a>&nbsp;includes industries targeted by the review, including steel and aluminum, semiconductors, electric vehicles (EVs), batteries and critical minerals, solar cells, and medical products. Each of these sectors will see a 25-100% increase in tariff rates for products imported from China beginning in 2024 through 2026.

core/paragraph

Review Findings The findings from the&nbsp;<a href="https://url.us.m.mimecastprotect.com/s/TSfrCKrAj0IMoPVZh3shvm?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noreferrer noopener">report</a>&nbsp;indicate that China has continued to engage in technology transfer-related practices that impede U.S. commerce, despite not eliminating them. USTR comments that China’s persistence, accompanied with aggressive actions such as cyber-attacks and theft, exacerbate trade challenges. Economic analyses presented suggested that tariffs, specifically the Section 301 tariffs on China, have had a modest negative impact on the overall United States economic welfare but have bolstered domestic production in sectors directly affected by the tariffs. However, retaliatory tariffs by China on exports from the United States have significantly harmed the United States. Overall, USTR has concluded that while tariffs may support diversification of supply chains and resilience, their efficacy depends on broader political dynamics.

As USTR’s report details, Ambassador Katherine Tai will propose the following adjustments in certain sectors:

&nbsp; &nbsp; &nbsp;Effective Year

Battery Parts (non-lithium-ion batteries)

Solar Cells (whether or not assembled into modules)

Lithium-ion Non-electric Vehicle Batteries

core/table

Proposed Modifications and New Exclusion Process USTR’s report includes modifications to the current Section 301 tariffs to be made at the direction of Ambassador Tai. The recommendations include the establishment of an exclusion process for select products limited to machinery used in domestic manufacturing efforts under Chapters 84 and 85 of the Harmonized Tariff Schedule (details provided in the&nbsp;<a href="https://url.us.m.mimecastprotect.com/s/TSfrCKrAj0IMoPVZh3shvm?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noreferrer noopener">report</a>),the allocation of additional funds to Customs and Border Protection (CBP) to ensure better enforcement of Section 301 tariffs, increased collaboration between the private sector and government to deter technology theft, and a review of approaches to diversify supply chains from outside of China and other near peer adversaries.

In terms of the extended exclusions for 77 medical-care products related to COVID-19, as well as the 352 extended exclusions, set to expire on May 31, 2024, the USTR’s report indicates only that the “…exclusions are scheduled to expire on May 31, 2024”. The report does not provide a clear path for their potential continuation or elimination beyond this date.

Next Steps USTR will release a Federal Register notice next week to allow for public comment on the proposed duty increases on certain sectors, including the tariff lines that will be affected by the increases. The public comment period will also include information around the exclusion process for machinery used in domestic manufacturing efforts. &nbsp;

If you have any questions about the implications of this announcement, please contact&nbsp;Michael Best’s Trade Practice Lead Sarah Helton at&nbsp;<a href="mailto:sarah.helton@michaelbest.com">sarah.helton@michaelbest.com</a>&nbsp;with questions.

To learn more about Michael Best Strategies' Trade Practice,&nbsp;<a href="https://michaelbeststrategies.com/industries/trade/" target="_blank" rel="noreferrer noopener">click here.</a>

Shattered glass light bulb with glowing blue light at its center against a dark background.

Abstract image depicting a dark blue background with a pattern of small, light blue dots forming upward spikes, resembling a digital graph or skyline.

Services

Slide Menu

Slide Search