USTR Finalizes China Section 301 Tariffs; Cracks Down on De Minimis Shipments

I. USTR Finalizes the China Section 301 Review and Applies Additional Tariffs to Critical Minerals

On September 13, 2024, the Office of the U.S. Trade Representative (USTR) announced final modifications concerning the statutory review of the tariff actions in the Section 301 investigation of the People’s Republic of China’s (China) Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. These modifications largely reflect the changes USTR proposed in May 2024 and aim to target “certain products from China in strategic sectors,” such as lithium-ion batteries, electronic vehicles, solar power, steel and aluminum, semiconductors, medical equipment, and shipping, as well creating an exclusion process for imported equipment dedicated to U.S. manufacturing activities. This action finalizes a review that began on May 5, 2022 and provides U.S. companies with additional certainty regarding the continued imposition of the Section 301 duties on covered goods from China. The key content of the finalized review will be made available in a Federal Register Notice of Modification.

Regarding the tariff increases, USTR will make changes to tariff rates for a wide range of products, such as those covered by chapters 25, 26, 28, 72, 73, 76, 85, and 87 of the Harmonized Tariff Schedule, for several different products in the following years:

Critical Minerals: Tariff rates will rise to 25 percent in 2024

Aluminum ores and concentrate
Chromium ores and concentrate
Cobalt ores, concentrates
Ferronickel, Ferroniobium and Tritium
Indium
Manganese ores and concentrate
Tin and Tantalum
Tungsten – concentrates, oxides, tungstates, carbides
Zinc
Other radioactive elements

Medical Products:

Face Masks: Tariff rates will rise to 25 percent in 2024 and to 50 percent in 2026, with the addition of statistical reporting number 6307.90.9870 (disposable textile face masks). Initially, USTR proposed a 25 percent rate in 2024.
Medical Gloves: Tariff rates will increase to 50 percent in 2025 and 100 percent in 2026, up from the previously proposed 25 percent in 2026.
Needle Syringes: Additional duties will be raised to 100 percent in 2024, compared to the previously proposed 50 percent, with a specific exclusion for enteral syringes until January 1, 2026.

In addition, USTR’s notice also includes the following changes:

2024

Steel and aluminum products – Increase rate to 25%
Battery parts (non-lithium-ion batteries) – Increase rate to 25%
Solar cells (whether or not assembled into modules) – Increase rate to 50%
Electric vehicles – Increase rate to 100%
Lithium-ion electrical vehicle batteries – Increase rate to 25%
Ship-to-shore cranes – Increase rate to 25%

2025

Semiconductors – Increase rate to 50%

2026

Lithium-ion non-electrical vehicle batteries – Increase rate to 25%
Permanent magnets – Increase rate to 25%
Natural graphite – Increase rate to 25%

With some exclusions for solar equipment, the tariff increases in 2024 are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after September 27, 2024. Tariff increases in 2025 and 2026 are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after January 1 of the corresponding year.

In addition, the USTR has added temporary exclusions for some machinery under HTSUS Chapters 84 and 85 and some Solar manufacturing equipment.

It is expected that the machinery exclusion process will commence soon.

II. Announcement of Proposed Rulemaking for Changes to De Minimis Exception

On September 13, 2024, the Biden-Harris Administration announced new actions to protect American consumers, workers, and businesses by cracking down on de minimis shipments with unsafe or unfairly traded products. Specifically, the Administration “intends to issue a Notice of Proposed Rulemaking that would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962.”

In addition, the Administration intends to issue a Notice of Proposed Rulemaking regarding the entry of low-value shipments to strengthen information collection requirements to promote greater visibility into de minimis shipments. This would require additional data for de minimis shipments – including the 10-digit tariff classification number and the person claiming the de minimis exemption – which will improve targeting of de minimis shipments while also aiming to facilitate expedited clearance of lawful de minimis shipments. The proposed changes would also clarify who is eligible for the administrative exemption and require filers to identify the person on whose behalf the exemption is being claimed, thereby protecting U.S. businesses from unfair competition against imported goods that would otherwise be charged duties or restricted from entry. Furthermore, importers (including those importing de minimis shipments) would be required to file Consumer Product Safety Commission (CPSC) testing certificates or General Certificates of Conformity (GCCs) at the time of entry. Today, these certificates are required, but only upon request from the CPSC or CBP.

Buchanan has a team of international trade and national security attorneys, and government relations professionals ready to help U.S. manufacturers with U.S. trade remedy laws and trade policy. U.S. AD/CVD tariff laws are one of the only available tools to reestablish an even playing field for American companies and avoid lost sales and profits. Our eBook, Protecting Domestic Producers: A Guide to Antidumping and Countervailing Investigations, shares details on how diverse domestic industries can take advantage of these laws – antidumping and countervailing duty investigations – to combat unfair foreign competition and receive adequate remedies and protections. Our dedicated team has decades of experience supporting clients across a range of industries – ranging from steel, chemical, rubber, mining, and agricultural products – to ensure that the U.S. market is operating under fair and equal conditions.