Following the U.S. Trade Representative's recommendations, President Biden has announced increased tariffs on $18 Billion of Chinese imports across strategic U.S. sectors which include steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products. This action follows recommendations by the U.S. Trade Representative (USTR), Katherine Tai, in a report following a four-year review of the effectiveness of the "China Section 301" tariffs first imposed in 2018 under Section 301 of the Trade Act of 1974. The review found that China had not eliminated its technology transfer-related acts, policies, and practices which continue to impose a burden or restriction on U.S. commerce. USTR Tai recommended that Section 301 tariffs currently imposed on products from China should remain.
The USTR recommends the newly proposed significant tariff increases in key sectors, in response to what it describes as China's ongoing unfair trade practices and in order to protect American workers and businesses. Ambassador Tai proposes the following tariff increases on imports from China under Section 301:
Steel and Aluminum: Increase from 0-7.5% to 25% in 2024
Semiconductors: Increase from 25% to 50% by 2025
Electric Vehicles (EV): Increase from 25% to 100% in 2024
Lithium-ion (EV) Batteries: Increase from 7.5% to 25% in 2024
Lithium-ion (Non-EV) Batteries: Increase from 7.5% to 25% in 2026
Battery Parts: Increase from 7.5% to 25% in 2024
Natural Graphite: Increase from zero to 25% in 2026
Permanent Magnets: Increase from zero to 25% in 2026
Other Critical Minerals: Increase from zero to 25% in 2024
Solar Cells (whether or not assembled into modules): Increase from 25% to 50% in 2024
Ship-To-Shore Cranes: Increase from 0 to 25% in 2024
Personal Protective Equipment (PPE) Including Certain Respirators and Face Masks: Increase from 0-7.5% to 25% in 2024
Rubber Medical and Surgical Gloves: Increase from 7.5% to 25% in 2026
Syringes and Needles: Increase from 0 to 50% in 2024
The report also recommends:
1) Establishment of an exclusion process targeting machinery used in domestic manufacturing, including proposals for nineteen exclusions for certain solar manufacturing equipment;
2) Allocating additional funds to U.S. Customs and Border Protection (CBP) for greater Section 301 enforcement;
3) Greater cooperation and collaboration between private companies and government authorities to fight state-sponsored technology theft; and
4) Ongoing assessment of approaches to support diversification of supply chains to enhance supply chain resilience.
The USTR next week will announce procedures for interested parties to comment on the proposed modifications and provide more information on procedures to request exclusions from the new tariffs for machinery used in domestic manufacturing.
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