USTR Not Re-opening Section 301 Exclusion Process for Consumer Goods

Washington, D.C. (May 21, 2024): The U.S. Trade Representative (USTR) released an overdue 4-year review on the impact of Section 301 Tariffs. The report found that China has made progress, but has not met the terms of the Phase One agreement and the tariffs will remain in place. It was hoped the report would offer a pathway to exclusions for consumer goods on List 3 & 4A, but only machinery equipment used in domestic manufacturing will be eligible for new exclusions.

Specifically, the report noted China continues to abuse tariff transfer policies and that U.S. Customs & Border Protection (CBP) needs more resources to enforce Section 301 violations. The U.S.T.R. also recommended increased cooperation between the public and private sectors to combat state-sponsored IP theft and the need to diversify supply chains for improved resiliency.

“The report is very disappointing,” said Bill Sells, SFIA SVP for Government and Public Affairs. “The goal of the tariffs was to punish China for IP violations and unfair trade practices and drive manufacturing jobs back to the U.S. The Section 301 tariffs have not accomplished any of these goals, and are nothing more than a tax that is ultimately paid by consumers. It is very unfortunate that we understand the importance of active lifestyles to overall health like never before, but we are artificially raising the cost barrier to healthier lives.”

In addition to not re-opening a fair and transparent exclusion process as recommended by the General Accountability Office (GAO), the President announced high tariffs on electric vehicles, batteries, and solar panels made in China. Former President Trump has announced his intention to raise and expand Section 301 Tariffs if elected, meaning the trade war with China will continue.

To facilitate production outside of China, the House Ways & Means Committee passed legislation to re-authorize the Generalized System of Preferences (GSP) and modify the Di Minimis exemption. GSP eliminates U.S. tariffs on products sourced in 119 countries with developing economies. Di minimis reform would restrict the use of direct-to-consumer low-dollar shipments from China to stem the flow of fake products entering the U.S. without CBP inspection. Both bills await a House floor vote.

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

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