The Office of the US Trade Representatives (USTR) announced that new, and higher, tariff actions will be phased in over the next few years. As the industry comes to terms with this hike on an array of commodities, there’s never been a better time to revisit how the first tariffs were brought about—back in 2018—and what their impact has been since.
In 2018, USTR conducted a Section 301 investigation that found the People’s Republic of China (PRC) acts, policies, and practices related to technology transfer, intellectual property, and innovation unreasonable and discriminatory. This prompted the initial action of implementing staged additional duties of 25 percent on 1,333 tariff subheadings. Since then, there have been numerous tariffs and exclusions applied to Chinese products.
These tariff rates were put in place to protect US industries and to remedy trade distortions from China.
Impact on United States
The negative effects of the Section 301 tariffs on the US are particularly associated with retaliatory tariffs that the PRC has applied to US exports. The retaliatory tariffs are between five and 25 percent of the value of the exported product on more than 800 US food and agricultural products, including soybeans.
Reviewing the Tariff’s Effect
In May 2022, the statutory four-year review process began and in its recent released report, the USTR found that the PRC did not eliminate its technology transfer related acts, policies, and practices. Instead, the review uncovered that, in some cases, the PRC has become more aggressive in its attempts to acquire and absorb foreign technology through cyber intrusions and cyber theft.
Throughout 2023, and the beginning of 2024, USTR and the Section 301 Committee held meetings with agency experts concerning the review and the comments received.
The Present Situation
This brings us to the recent tariff increases in various sectors including steel and aluminum, semiconductors, electric vehicles, medical products, and more.
Based on these findings, the new Section 301 tariff recommendations hope to further encourage the PRC to eliminate its harmful acts, policies, and practices. Mohawk Global can assist in reviewing import data to identify impacted HTS codes to help mitigate the impact of the new tariffs. Reach out today.
By Clarissa Chiclana