As required by law, the U.S. Trade Representative (USTR) announced May 3 that it has initiated a four-year “review of necessity” process for tariffs on Chinese imports under Sec. 301 of the Trade Act of 1974. In a May 10 speech, President Joe Biden said combating inflation is his top domestic priority citing the pandemic, supply chain issues and war in Ukraine as the primary causes, and that he might consider eliminating the Sec. 301 tariffs as a way to help lower prices for goods in the U.S. With that in mind, the USTR’s review of tariffs on Chinese imports might be the vehicle for repeal if President Biden opts to do so, but none of the USTR’s actions so far indicate a pivot in that direction.
The Sec. 301 review process must be done in conjunction with the tariffs’ four-year expirations, so USTR has stated it will take requests to continue the Lists 1 and 2 China tariffs, which expire July 6 and August 23, respectively. However, USTR is taking requests to continue the Lists 3 and 4a tariffs as well because they’re considered to be “modifications” to Lists 1 and 2. As such, the total tariff review will ultimately cover $370 billion of Chinese imports, and requests for continuation must be submitted to USTR prior to the four-year anniversary of List 1, which is July 6.
As of May 26, USTR had received at least 14 submissions calling for the Sec. 301 tariffs to be continued. USTR won’t identify them until later in the process but is expected to continue all tariffs even if a request is limited to one or several products. Based on these requests, USTR will publish a notice after July 6 announcing the continuation of the action and proceed with a review of the tariffs. This part of the process has no deadline, but should provide an opportunity for those opposed to the tariffs to submit comments.
USTR’s top attorney reportedly said the agency’s review of Trump-era tariffs on Chinese goods is likely to take months, which would give President Biden a window for using the process to repeal some or all of the tariffs. He could also truncate the process by repealing the tariffs by presidential decree or use USTR’s review process to justify continuing the tariffs, but whatever direction he takes will generate blowback.
U.S. Trade Representative Katherine Tai opposes lifting the tariffs, expressing skepticism that it would lower inflation and concerns about costing leverage with China. Organized labor opposes lifting the tariffs, too, as does certain industry groups like the National Council of Textile Organizations. On the other side, proponents of repeal include the U.S. Chamber of Commerce and National Retail Federation (NRF), with NRF also coordinating the Americans for Free Trade coalition to which IHA belongs.
Congress doesn’t have a role to play in the review of expiring 301 tariffs, but House and Senate members are making their feelings known to the White House. On May 25, a bipartisan group of nine senators led by Sen. Rob Portman (R-OH) sent a letter to President Biden calling for him to keep the China 301 tariffs in place, and there will undoubtedly be bipartisan calls to let the tariffs expire, too.
