U.S. stakeholders continued to lobby the Biden Administration this week on a wide range of issues relating to the Section 301 tariffs imposed adopted by the Trump Administration on imports of merchandise from China. In a letter signed by over thirty trade groups, including the U.S. Chamber of Commerce and numerous associations representing U.S. agricultural interests, signatories urged the current Administration to formally adopt measures previously included in the stalled Trade Act of 2021. Specifically, among other provisions, the Trade Act would have reinstated certain expired exclusion and reinstated the Section 301 exclusion process.

The letter urges the Administration to work with the Chinese government to increase purchases of U.S. goods and implement all structural commitments of the U.S.China Phase One Trade Agreement (“Phase One”), noting that the Chinese government has already met important benchmarks and commitments, to the benefit of American businesses and workers, particularly in the agricultural sector. The letter argues that the imposition of Section 301 tariffs has had heavy costs on the American public and contributed to inflationary pressures and rising prices. The letter concludes by acknowledging outstanding issues visàvis the U.S.China trade partnership and hopes that the Biden Administration will move forward with negotiating further Agreements which address those concerns in a manner which benefits the interests of both countries.

When first conceived, the imposition of Section 301 tariffs ran parallel to a formal exclusion process whereby “U.S. stakeholders {could} request that particular products…be excluded from the additional duties.” This process aimed to provide relief for parties which imported products that were “available only from China” or in cases where “the imposition of additional duties on the particular product would cause severe economic harm to the requestor or other U.S. interests.” In turn, USTR would “periodically announce” decisions on pending requests. Affirmative exclusion determinations would be applied retroactively, starting from the date the corresponding Section 301 tariffs covering the product in question would have come into effect. Exclusions would be effective for oneyear periods and could be extended on an annual basis upon conditional application.

At the time Section 301 tariffs were first adopted, most stakeholders assumed that USTR would periodically open the record and allow for new rounds of product exclusion requests. In practice, and except for a very narrowly tailored process to request “COVID Exclusions” announced in March of 2020, USTR’s exclusion request process has laid dormant following its initial offering. Furthermore, USTR has granted fewer and fewer annual extensions to those products which had been granted initial exclusions to Section 301 tariffs. In this respect, the Biden Administration can be understood to have perpetuated, and even expanded, the Trump Administration’s use of Section 301.

While the Biden Administration has committed to “reviewing” the Phase One Agreement with China, there have not been any further public developments regarding implementation, China’s failure to meet its commitments, or the possible negotiation of further Phase Two Agreements. As it stands, the trade deficit for the U.S. trading with China equaled $310 billion for FY 2020, which represented a 10year low.

Nevertheless, there is bipartisan support in the Senate for the Trade Act of 2021, which may lead to the reinstatement of exclusions and an exclusion process without Presidential action. Accordingly, importers across the country should continue maintaining records for Section 301 entries that have either been previously subject to exclusions, or which importers believe may be a good candidate for exclusion in the future. It is always easier to track the information now than try to find months of data later.

If you have any questions about managing Section 301 duties, what information to begin compiling, or the legislative process do not hesitate to contact an attorney at Barnes, Richardson & Colburn, LLP.