USTR Finalizes Action on New and Increased Section 301 Tariffs

The Office of the United States Trade Representative (USTR) announced final modifications concerning the statutory review of the tariff actions in the Section 301 investigation of the People's Republic of China's (PRC) Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation on Sept. 13, 2024.¹

New and Increased Section 301 Tariffs

In response to the proposed modifications announced in May 2024,² USTR received and considered more than 1,100 public comments. The May 2024 proposed modifications were largely adopted (with the exception of face masks, medical gloves, ship-to-shore cranes, and syringes and needles where there were different rates, implementation dates, and/or availability of exclusions):

• Battery Parts (non-lithium-ion batteries). Increase rate to 25 percent in 2024.
• Electric Vehicles (EV). Increase rate to 100 percent in 2024.
• Face Masks. Increase rate to 25 percent in 2024 or 2025 and 50 percent in 2026.
• Lithium-Ion EV Batteries. Increase rate to 25 percent in 2024.
• Lithium-Ion Non-EV Batteries. Increase rate to 25 percent in 2026.
• Medical Gloves. Increase rate to 50 percent in 2025 and 100 percent in 2026.
• Natural Graphite. Increase rate to 25 percent in 2026.
• Other Critical Minerals. Increase rate to 25 percent in 2024.
• Permanent Magnets. Increase rate to 25 percent in 2026.
• Semiconductors. Increase rate to 50 percent in 2025.
• Ship-to-Shore Cranes. Increase rate to 25 percent in 2024 (with certain exclusions).
• Solar Cells (whether or not assembled into modules). Increase rate to 50 percent in 2024.
• Steel and Aluminum Products. Increase rate to 25 percent in 2024.
• Syringes and Needles. Increase rate to 100 percent in 2024 (with certain exclusions).

Tariff increases in 2024 are applicable to products imported on or after Sept. 27, 2024. Tariff increases in 2025 are applicable to products imported on or after Jan. 1, 2025. Tariff increases in 2026 are applicable to products imported on or after Jan. 1, 2026.

Importers should refer to the exact language in Harmonized Tariff Schedule of the United States (HTSUS) modifications contained in Annex C to the Federal Register notice for the purposes of assessing Section 301 duties and exclusions.³ (The descriptions in Annex A are informal, summary descriptions.)

Temporary Exclusions for Solar Manufacturing Equipment

USTR also adopted 14 exclusions to temporarily exclude wafer and cell manufacturing equipment from the Section 301 tariffs but determined not to adopt the five proposed exclusions covering solar module manufacturing equipment. The exclusions are retroactive and applicable to products imported on or after Jan. 1, 2024, and through May 31, 2025.

Machinery Exclusion Process

With respect to machinery exclusion, USTR determined to add five subheadings in addition to the proposed 312 subheadings (for a total of 317) to be eligible for consideration of temporary exclusions. USTR has determined not to add subheadings outside of Chapters 84 and 85 or subheadings that include only parts, accessories, consumables or general equipment that is unable to physically change a good. It is expected that USTR will publish the procedures for requesting exclusions of products under these eligible subheadings in a separate notice.

Proposed Tariff Increases on Tungsten Products, Polysilicon and Wafers

USTR also proposed increasing tariffs to 25 percent for three subheadings (8101.94.00, 8101.99.10 and 8101.99.80) covering certain tungsten products and proposed increasing tariffs to 50 percent for two subheadings (2804.61.00 and 3818.00.00) covering wafers and polysilicon. USTR plans to set out a public comment process via a separate notice.

Looking Forward

On a separate but related note, on Sept. 13, 2024, the Biden Administration also announced its plan to issue a notice of proposed rulemaking that would exclude from the de minimis exemption all shipments containing products covered by Section 301, Section 201 or Section 232 trade enforcement actions.⁴ If finalized, these goods would no longer be eligible for the de minimis exemption, which currently allows merchandise valued at $800 or less to be imported free of duties and taxes.

As a result, companies and consumers should expect to see increased pricing for Chinese-origin products and inputs and may want to consider altering their supply chain to limit exposure to such Chinese-origin products and inputs. Holland & Knight's International Trade Group is closely monitoring these developments and will continue advising clients on Section 301 duties and exclusions.

Notes

¹ Notice of Modification: China's Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation.

² Biden Administration Announces Completion of China Section 301 Review and New Tariffs, Holland & Knight alert, May 14, 2024; Federal Register.

³ Notice of Modification: China's Acts, Policies and Practices Related to Technology.

Transfer, Intellectual Property and Innovation.

⁴ Biden Administration, Sept. 13, 2024.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.