Congress Encouraged to Work with USTR to Improve Section 301 Tariff Exclusion Process

Washington, D.C. (February 15, 2024): A Congressional Research Service (CRS) report recommends Congress engage with the USTR to develop and implement guidelines on the grant exclusion process for tariffs applied to imports of Chinese products under Section 301 of the Trade Act of 1974. In the coming months, USTR hopes to complete a required four-year review of the tariffs currently in place on hundreds of billions of dollars worth of Chinese goods. The CRS report suggests Congress “could potentially promote transparency, consistency, and proper application of standards in reviewing requests, thereby helping to ensure that the USTR carries out Section 301 objectives as prescribed by Congress.”

Lawmakers have offered legislation to amend Section 301 and explored creating or restructuring the exclusion process to make it more efficient and transparent during hearings and shared their position with the USTR. Congress has expressed interest in “recalibrating” the tariffs to align better with U.S. economic and strategic priorities, some prefer a partial removal of the tariffs on consumer goods to help U.S. companies and lower consumer costs. Others believe the tariffs provide leverage in future U.S.-China trade negotiations and should be preserved to promote domestic manufacturing and supply chain stability.

A letter from U.S. Trade Representative Tai to the House Select Committee on Strategic Competition between the U.S. and the Chinese Communist Party suggests the USTR will consider other options available to make the tariffs “more strategic” while remaining sensitive to the incentives the tariffs create. Ambassador Tai pointed out that the Section 301 tariffs promoted diversity in supply chains as companies have moved out of China which helped protect them from ‘forced technology transfers’ in China.

USTR acknowledged that Chinese firms have moved some operations away from China to avoid the tariffs and that “existing rules of origin” left openings for those Chinese firms to benefit from preferential MFN tariff treatment and Free Trade Agreements, thereby avoiding Section 301 tariffs. Ambassador Tai noted the challenges presented by easy access to the U.S. market for goods from key trading partners and that the Administration will work with Congress to evaluate these challenges and address them.

For more information or for questions, please contact Bill Sells, SVP, Government & Public Affairs, at [email protected].

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