On September 2, 2022, the Office of the U.S. Trade Representative (USTR) announced that its statutory four-year review of Section 301 tariffs imposed on Chinese goods on July 6 and August 23, 2018 will be extended, with the tariffs remaining in effect while the agency conducts a more comprehensive review of their necessity. USTR stated that it will separately announce the process for its larger review, but confirmed that it will accept written submissions from interested parties regarding issues including the effectiveness of the tariffs, their impact on the U.S. economy, and additional actions beyond tariffs that the U.S. could consider moving forward.

Section 301 (Title III of the Trade Act of 1974, 19 U.S.C. §§2411-2420) authorizes the USTR to take action to encourage foreign countries to abandon or mitigate unfair trade practices affecting U.S. commerce. In 2018, the USTR determined that China’s acts, policies, and practices related to technology transfer, intellectual property (IP), and innovation were “unreasonable or discriminatory and burdened or restricted U.S. commerce”.[1] In order to counter them and obtain their elimination, the Trump Administration used Section 301 authorities to impose four rounds of increased tariffs on approximately two-thirds of all U.S. imports from China, sparking a heavily publicized and controversial trade war with Beijing.

 U.S.-China Section 301 tariffs currently apply to approximately $375 billion in annual U.S. imports of Chinese merchandise – the USTR’s statute requires that such tariffs terminate after four years, unless requests for continuation of the tariffs are made by domestic companies that benefit from the tariffs. USTR confirmed that it had received numerous requests to continue the tariffs from domestic industries, including 244 requests from domestic producers and 32 requests from trade associations. Representatives of multiple domestic industries reported that the tariffs imposed on July 6 and August 23, 2018 “have created more leverage to induce China to eliminate the policies and practices that are the subject of the Section 301 action, and have helped to address unfair competition resulting from China’s technology transfer policies and practices and encourage better policies and practices”.[2] As such, the USTR determined that the tariffs did not terminate on their four-year anniversary dates (July 6, 2022 and August 23, 2022), and will remain in effect because “at least one representative of a domestic industry which benefits from each action has submitted a written request for the continuation of such action” within the last 60 days. 

Thousands of importers have filed law suits in the U.S. Court of International Trade (CIT) challenging the USTR’s imposition of List 3 and 4 tariffs.  The CIT has preliminarily ruled that these tariffs are unlawful, because the USTR did not comply with the Administrative Procedures Act.  However, the CIT has not yet ordered that the government must refund or stop imposing these 301 tariffs.         

Crowell & Moring, LLP continue to monitor this development and the potential impact to businesses and consumers moving forward.

[1] “Section 301 of the Trade Act of 1974 – Congress.” Accessed September 8, 2022. https://crsreports.congress.gov/product/pdf/IF/IF11346.

[2] Federal Register: Accessed September 8, 2022. https://www.federalregister.gov/documents/2022/09/08/2022-19365/continuation-of-actions-chinas-acts-policies-and-practices-related-to-technology-transfer.