Following USTR review, White House announces tariff increases on certain U.S.-bound imports from China

Following a statutory four-year review process of Section 301 tariffs levied on United States-bound imports from China, those tariffs are remaining in place, with those for certain products, pegged to see increases, the White House stated today.

The review process was conducted by the Office of the United States Trade Representative (USTR) for the tariffs which initially took effect in 2018 under the direction of the Trump administration

The impetus for the increase in tariffs under Section 301 of the Trade Act of 1974 on $18 billion worth of imports from China is due to various actions China has taken, according to the White House, including unfair trade practices concerning technology transfer, intellectual property, and innovation threatening American workers and flooding global markets with artificially low-priced exports.

What’s more, the White House observed that President Biden has long maintained that while American workers and businesses can outcompete anyone—if there is fair competition—the Chinese government has leveraged unfair, non-market practices. Those practices, it noted, include forced technology transfers and intellectual property theft contributing 70%-to-90% of global production for the necessary critical inputs for American technologies, infrastructure, energy, and healthcare, in turn, creating “unacceptable risks to America’s supply chains and economic security.”

“With this announcement, the President is taking important enforcement action to raise tariffs in key sectors under Section 301 of our trade laws that will make sure that historic investments in jobs spurred by President Biden’s actions are not undercut by a flood of unfairly underpriced exports from China in areas like EVs, batteries, vital medical equipment, steel and aluminum, semiconductors, and solar,” said Lael Brainard, National Economic Advisor for the President's National Economic Council. “China is using the same playbook it has before to power its own growth at the expense of others by continuing to invest despite excess Chinese capacity and flooding global markets with exports that are underpriced due to unfair practices. China is simply too big to play by its own rules. The President’s actions reflect the conclusions of U.S. Trade Representative Katherine Tai’s mandatory four-year review that China continues to engage in unfair practices, such as forced technology transfer and restrictions and intellectual property theft from U.S. companies.” 

Notable tariff hikes on U.S.-bound imports from China cited by the White House include:

• certain steel and aluminum products under Section 301 increasing from 0-7.5% to 25% in 2024;
• semiconductors increasing from 25% to 50% by 2025;
• electric vehicles under Section 301 increasing from 25% to 100% in 2024;
• lithium-ion EV batteries increasing from 7.5% to 25% in 2023, with the tariff rate on lithium-ion non-EV batteries increasing from 7.5% to 25% in 2026, and the tariff rate on battery parts increasing from 7.5% to 25% in 2024 (the White House said that China controls more than 80% of certain segments of the EV battery supply chain “despite rapid and recent progress in U.S. onshoring”);
• solar cells tariff rates, whether or not assembled into modules, increasing from 25% to 50% in 2024;
• ship-to-shore cranes increasing from 0% to 25% in 2024; and
• for medical products, tariffs on syringes and needles increasing from 0% to 50% in 2024, certain personal protective equipment, including certain respirators and face masks, increasing from 0-7.5% to 25% in 2024, and tariffs on rubber medical and surgical gloves increasing from 7.5% to 25% in 2026

“As the President recognizes in his memorandum, while the tariffs have been effective in encouraging the PRC to take some steps to address the issues identified in the Section 301 investigation, further action is required” said USTR Ambassador Katherine Tai in a statement. “In light of President Biden’s direction, I will be proposing modifications to the China tariffs under Section 301 to confront the PRC’s unfair policies and practices. From the beginning of the Biden-Harris Administration, I have been committed to using every lever of my office to promote American jobs and investments, and these recommendations are no different. Today, we serve our statutory goal to stop the PRC’s harmful technology transfer-related acts, policies, and practices, including its cyber intrusions and cyber theft. I take this charge seriously, and I will continue to work with my partners across sectors to ensure any action complements the Biden-Harris Administration’s efforts to expand opportunities for American workers and manufacturers.”

The Washington, D.C.-based National Retail Federation (NRF) expressed its disdain with the USTR’s review of the Section 301 tariffs and the White House’s actions, with NRF Executive Vice President of Government Relations David French saying that NRF is extremely disappointed that the USTR and the Biden administration have chosen to double down on a failed and inflationary strategy by sustaining and expanding the Section 301 China tariffs.

“Maintaining these tariffs on consumer goods will increase costs that consumers pay on everyday products imported from China,” said French. “As consumers continue to battle inflation, the last thing the administration should be doing is placing additional taxes on imported products that will be paid by U.S. importers and eventually U.S. consumers. The ongoing Section 301 China tariffs have not worked to force China to change its trade practices. We need a new strategy that will address the core issues and provide actual incentives for U.S. companies to shift their supply chains from China.”

The NRF executive added that what is needed are new free trade agreements focusing on both market access and tariff reductions, coupled with Congress passing long-standing trade preference programs which remain expired.

“The U.S. economy needs real incentives—unlike those in the form of penal tariffs—to shift supply chains away from China. USTR must immediately renew the exclusions that are set to expire at the end of the month and open a fair and transparent exclusions process for all products covered by the tariffs,” he said.

And the Washington, D.C.-based American Apparel & Footwear Association also was not pleased with this development, saying that while these actions were not unexpected, they are a real blow to American consumers and manufacturers alike.

“Tariffs are regressive taxes that are paid by U.S. importers and U.S. manufacturers and ultimately passed along to U.S. consumers. At a time when hardworking American families are struggling with inflation, continued tariffs on consumer necessities are entirely unwelcome,” said AAFA president and CEO Steve Lamar. “The Biden Administration has had two years to get it right. Unfortunately, they doubled down on a flawed tariff policy, despite the Biden Administration's own acknowledgment that this policy has failed in its goals, and overwhelming public input that supported a different outcome.”

John Donigian, Senior Director of Supply Chain Strategy at Moody's, told LM that the new tariffs are another hit to supply chains as they try to manage ongoing risks and build resiliency.

“Whenever tariffs are increased, regardless of the rational for doing so, the impact goes beyond cost increases to companies and consumers,” he said. “Discussions on redesigning supply chains surface through considerations for reshoring as one way to offset costs. Supplier relationships are strained as contract re-negotiations to offset tariff impacts become commonplace. Companies may also adjust their inventory positions through increased buffer stocks to account for delays or disruptions in the supply chain. All of this leads to additional risk and complexity in an already strained supply chain environment.”