Review of Section 301 Tariffs on List 1 Goods Could Be Initiated Soon

U.S. press reports indicate that President Biden is expected to soon initiate a review of the first tranche of tariffs (List 1) that were imposed on some US$34 billion worth of imports from mainland China on 6 July 2018. A review of the second tranche of tariffs (List 2), which entered into force on 23 August 2018 and affect some US$16 billion worth of mainland Chinese products, could come shortly thereafter.

The Trade Act of 1974 (and specifically 19 USC 2417) provides that any action taken under Section 301 shall be terminated after four years, unless the petitioner or a representative of the domestic industry which benefits from such action has submitted to the Office of the U.S. Trade Representative within 60 days from its date of expiration a written request for the continuation of such action. Since the original action was self-initiated by USTR, it would appear that the only way for the List 1 tariffs to continue would be for a representative of the domestic industry to submit a request to USTR as indicated above. That process raises several questions, including how to identify the domestic industry that benefits from the current measures as well as whether such industry would have to be a direct beneficiary. Be that as it may, it is likely that an eventual decision by USTR to extend these measures would face some sort of legal action, given the procedural uncertainties that surround a potential extension.

It would be reasonable to expect the issuance by USTR of a request for public comment prior to the 60-day period before expiration (i.e., by early May). If a request for continuation of the Section 301 measures on List 1 products is submitted to USTR, the agency would have to conduct a review of the effectiveness of such measures as well as other actions that could be taken (including actions against other goods or services) and the effect of such actions on the U.S. economy, including consumers. That process would have to be completed prior to 6 July 2022 in order for the Section 301 measures on List 1 products to be extended. In its request for public input, USTR could conceivably seek input on List 2 products (and possibly on the other lists) as well.

In response to the press reports on a forthcoming review of the List 1 tariffs, the multi-industry coalition Americans for Free Trade said that “as the Biden administration begins its review of these tariffs, it is absolutely essential that the review process is fully transparent, involves stakeholder input – including stakeholders who pay the tariffs, and includes a full economic assessment of the tariffs’ impact” from USTR. This group also believes the review “should not just be limited to the first list of tariffs that were implemented, but should extend to all four lists.”

Another option for the Biden administration would be to allow the current Section 301 measures to expire and initiate a brand new, more targeted investigation into mainland China’s practices. With regard to that possibility, U.S. press reports indicate that the administration recently determined to delay the initiation of any such investigation, at least for the time being, over questions about its scope.