Overview of Section 301 tariffs: U.S. and China exchange $34 billion in tariffs, more to come
- U.S. tariffs on $34 billion worth of Chinese goods kicked in on July 6
- Affected products include motor vehicles, tractors, rail, airplanes, and various other industrial parts
- China retaliated with tariffs on its $34 billion list of goods, including soybeans, pork and electric vehicles
Starting on July 6, 2018, the Trump administration imposed a 25 percent tariff on certain Chinese machinery and imports following an investigation pursuant to Section 301 of the Trade Act of 1974. The United States Trade Representative (USTR) has determined, as a result of that investigation, that China’s practices related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory, and restrict U.S. commerce.
The list of Chinese products subject to the Section 301 tariffs, known as List 1, contains 818 products and accounts for about $34 billion in annual trade. Affected products include a wide variety of machine tools, tractors, rail, motor vehicles, airplanes, a variety of components, and various industrial parts.
USTR also released an additional list known as List 2, which contains 284 subheadings on additional Chinese goods accounting for an additional $16 billion in annual trade. List 2 currently is undergoing further review in a public comment and hearing process, after which the USTR will issue a final determination on which products will be subject to the additional tariff. Combined, the two lists include a total of 1,102 covered goods that are valued at $50 billion. AFS has assembled a list of some of the various foundry products that are included on List 1: Please click here to view.
In response to the Section 301 tariffs by the U.S., China announced its own list of U.S. goods subject to new tariffs covering a total of 545 tariff lines (list in Chinese, and unofficial NAM English translation). Similar to the approach and timeline taken by the U.S., China has imposed retaliatory tariffs in two stages, with the first stage in effect since July 6, 2018. Some examples of the American products subject to tariffs include a heavy focus on agricultural, animal, and aquatic products.
USTR announces new list of $200 billion worth of Chinese goods that may be subject to 10 percent tariffs
On July 10, the Trump administration released a new proposed list (List 3) of $200 billion worth of Chinese imports subject to a 10 percent tariff, stemming from the Section 301 investigation into China’s unfair practices. The new tariffs will not go into effect immediately, but will undergo a two-month review process, with hearings Aug. 20-23. This list of products includes 6,031 tariff subheadings, covering a broad range of products relevant to manufacturers and metalcasting. Products of interest to AFS members include: metals and metal products, including base and precious metals; prepared chemical articles; machinery and equipment, including hand tools; rail; vehicles; and aircraft items. AFS has assembled a list of some of the various foundry products that are included on List 3 here: Please click here to view.
USTR will run a formal public comment process, allowing companies and other stakeholders to comment on proposed items and suggest items for deletion or addition. This relatively short process includes the following timeline:
- July 27 for requests to appear at the public hearing;
- Aug. 17 for submission of written comments;
- Aug. 20-23 for a public hearing at USITC; and,
- Aug. 30 deadline for post-hearing rebuttals.
Section 301 exclusion requests
On July 6, 2018, the USTR announced an exclusion process for Chinese products subject to Section 301 tariffs from List 1 (on 818 products in Annex A and B). The Federal Register notice outlines the criteria and process for a product exclusion request. In making its determination on each request, USTR may consider whether a product is available from a source in the U.S. or outside of China, whether the additional duties would cause severe economic harm to the requestor or other U.S. interests, and whether the particular product is strategically important or related to Chinese industrial programs including “Made in China 2025.”
Important dates and deadlines:
- Interested parties have 90 days to file a request for a product exclusion; the request period will end on Oct. 9, 2018.
- Following public posting of the filed request on regulations.gov, the public will have 14 days to file responses to the request for product exclusion. After the close of the 14-day response period, interested persons will have an additional seven days to reply to any responses received in support of or opposition to the request.
- Exclusions will be effective for one year upon the publication of the exclusion determination in the Federal Register and will apply retroactively to July 6, 2018.
Exclusions will be made on a product basis and will apply to all imports of the product, regardless of whether the importer filed a request. The U.S. Customs and Border Protection will apply the tariff exclusions based on the product.
What to do now?
AFS is strongly recommending that members carefully review all three U.S. tariff lists, as well as the Chinese retaliation list that are or will be subject to Section 301 tariffs in order to determine potential exposure.
AFS continues to be actively engaged in trade tariffs impacting the metalcasting industry.
For additional information, contact Stephanie Salmon, AFS Washington Office, at ssalmon@afsinc.org.