May 15th, 2024

Section 301 Duties: Unpacking the USTR’s Four-Year Review and Future Trade Implications

Section 301 duties continue to play an increasingly pivotal role in U.S. trade strategy to counteract inequitable trade practices and intellectual property theft by China. In the latest development, the Office of the US Trade Representative (USTR) announced the conclusion of a statutorily required four-year review of the Section 301 duties imposed on imports of Chinese goods. The report is available here.

The Administration has determined to keep Section 301 duties against Chinese goods in place, and to increase Section 301 duty rates on some 18 billion per year of certain Chinese products. It has committed to launch a new round of tariff exclusion petitions, but only on a specific number of tariff items covering goods used in US manufacturing.

Background of  Section 301 Duties on Chinese Goods

Section 301 of the Trade Act of 1974 allows the USTR to investigate and act against any practice by a foreign government that violates an international trade agreement, or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce. Section 301 duties on Chinese goods were initially implemented by the Trump Administration in 2018[1] to target a dragnet array of Chinese-origin products, with the asserted goal of pressuring China into reforming its unfair trade practices, particularly regarding intellectually property transfers.  Section 301 duties have continued unabated under President Biden with little meaningful changes in the rationales or impact of the duties on US producers and consumers. Most Trump Administration product exclusions ended at the end of 2020. The Biden Administration revived some 32 exclusions, which are scheduled to expire on May 31, 2024. The Four-Year Report provides no indication these exclusions will be further extended.

Under the Trade Act, Section 301 actions must undergo a statutory review every four-years—a process designed to measure the effectiveness of the tariffs in achieving their intended objectives, review changes in the economic landscape, assess changes in the behavior of the targeted nation, and evaluate the impact on U.S. industries and consumers. The USTR conducts the four-year review to decide whether to continue, modify, or remove the tariffs.

USTR Four-Year Review and Report

On May 5, 2022, the USTR initiated this mandatory four-year review of the Section 301 duties. Public comments were sought as part of this review, with a deadline of January 17, 2023, though no public hearings were held.

More than two years later, on May 14, 2024, the USTR announced the conclusion of its statutorily required four-year review of the Section 301 duties and published a report addressing necessary statutory elements of the review, implementing modifications to strengthen the actions, and imposing strategic increases in the tariffs on goods within sectors where China has been particularly aggressive, or where the United States has recently made significant investments (e.g., the Inflation Reduction Act and the Bipartisan Infrastructure Law). The Report also concludes that the relocation of sourcing and production out of China by US companies, while accelerated since the introduction of Section 301 duties, remains inadequate in counteracting China’s unfair trade practices. The tariff adjustments will be phased in according to the specific merchandise involved and are designed to bolster existing US government initiatives.

Section 301 Modifications, Tariff Increases, and Exclusion Process

The USTR will maintain Section 301 Duties at the rates published for Lists 1-4a on the majority of subject merchandise from China.

The USTR is also set to raise tariffs on the following Chinese-origin products:

  • Certain steel and aluminum products will see an increase from 7.5 percent to 25 percent in 2024, with a further increase to 50 percent by 2025.
  • Electric vehicles (EV) will face a hike from 25 percent to 100 percent in 2024.
  • Lithium-ion EV batteries will have an increased rate from 7.5 percent to 25 percent in 2024.
  • Lithium-ion non-EV batteries will see a tariff increase from 7.5 percent to 25 percent in 2026.
  • Battery parts will be subject to an increase from 7.5 percent to 25 percent in 2024.
  • Solar cells (whether or not assembled into modules) will have tariffs raised from 25 percent to 50 percent in 2024.
  • Certain medical products, including specific types of personal protective equipment like respirators and face masks, will see an increase from 0-7.5 percent to 25 percent beginning in 2024, and rubber medical and surgical gloves will increase from 7.5 percent to 25 percent in 2026.

Additionally, previously exempt Chinese-origin products will now face Section 301 tariffs:

  • Ship-to-shore cranes will be subjected to a 25 percent tariff starting in 2024.
  • Medical products such as syringes and needles will encounter a 50 percent tariff beginning in 2024.

The Report also recommends the establishment of an administrative exclusion process specifically aimed at machinery used in domestic manufacturing to alleviate the additional costs on US producers caused by the Section 301 duties. Additionally, USTR proposed a list of 19 specific temporary exclusions related to certain solar manufacturing equipment.

Current Exclusions Set to Expire May 31, 2024

The Report mentions that the 352 product exclusions previously granted were previously extended through May 31, 2024; however, there is no indication provided in the Report that these exclusions will be extended beyond this date, strongly suggesting that, as of June 1, importers may face increased costs if these exclusions are not extended further. Engaging with a Customs broker to lock in the date of entry for tariff purposes as soon as shipments arrive could help to mitigate some of the additional costs, at least in the near term.

USTR Soliciting Additional Comments

There will be an opportunity for interested persons to comment on the proposed modifications and the exclusion process for machinery used in domestic manufacturing. Details on the process and deadline for submitting comments will be posed in a Federal Register notice next week.

Looking Ahead

As the USTR has yet to release comprehensive details on the continuation of current exclusions, the business community remains in a state of anticipatory planning. We will keep a close eye on developments and provide updates as more information becomes available. In the meantime, for businesses navigating these changes, early planning and consultation with trade experts can provide a strategic advantage.

If you have any questions concerning the Administration’s actions, please contact a Neville Peterson professional.


[1] The USTR launched a Section 301 investigation in 2017 to evaluate if China’s practices related to technology transfer, intellectual property, and innovation unfairly burden or discriminate against U.S. commerce, qualifying them for potential action under Section 301. The USTR concluded in April 2018, that China’s restrictive foreign ownership policies, like joint venture requirements and foreign equity limitations, coercive technology licensing terms, strategic acquisition of U.S. firms to transfer technology, and unauthorized cyber intrusions into U.S. companies, were indeed restrictive and discriminatory. Subsequently, the USTR imposed tariffs on approximately $34 billion and $16 billion worth of Chinese imports under List 1 and List 2, respectively. Following Chinese retaliation, additional tariffs were extended to about $200 billion and $300 billion of Chinese goods under List 3 and List 4A (tariffs for products under List 4B were suspended in December 2019 after the U.S.-China Phase One trade agreement).