The Office of the U.S. Trade Representative (USTR) released a proposed list of approximately 1,300 products imported from China that would be subject to an additional 25 percent tariff in response to the conclusions reached in an investigation of China’s policies and practices with respect to U.S. technology and intellectual property rights. Here is a link to the USTR Press Release. USTR solicits written comments from interested parties and will convene a public hearing with respect to the proposed action before making a final determination on the targeted imports and levels of additional duties.

Background

Following an investigation initiated in August, 2017 under Section 301 of the Trade Act of 1974, USTR last month made a determination that certain laws, policies, practices and acts of the Government of China unreasonably and discriminatorily harm American intellectual property rights, innovation and technology development. Specifically, USTR concluded that China:

  • Uses foreign ownership restrictions to require or pressure technology transfer from U.S. companies;
  • Imposes technology licensing terms on U.S. companies that favor Chinese recipients;
  • Encourages investments in, and acquisitions of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property; and
  • Conducts and supports intrusions into, and thefts from, the computer networks of U.S. companies to access their commercial information and trade secrets.

Proposed Tariff List

Section 301 authorizes the President to increase import tariffs on goods from China to obtain elimination of such unreasonable and discriminatory policies, practices and acts. In accordance with this authority, USTR on April 3, 2018 issued a notice of a proposed action to impose an additional duty of 25 percent on a lengthy list of products of Chinese origin. The preview version of the USTR Notice and Annex of targeted products that will soon be published in the Federal Register can be found here. The list covers about 1,300 tariff classifications based on HTSUS number. According to USTR, the list was developed in order to target products that benefit from Chinese industrial policies, including Made in China 2025. As a result, the list includes products in the technology, aerospace, information, communication, medical, robotics and machinery sectors, among others. Although USTR claims that products likely to cause disruptions to the U.S. economy or impact U.S. consumers were eliminated, the total value of impacted imports is estimated to be around $50 billion.

Interestingly, the list includes a number of steel and aluminum HTSUS classifications that appear to overlap items previously captured by the earlier Section 232 tariff action. This suggests that the 25 percent Section 301 tariff on these items would be additive to the 25 percent and 10 percent Section 232 tariffs imposed on these items, respectively, perhaps in response to the recent announcement by China that it would impose $611.5 million worth of new tariffs on 128 U.S. goods – including fruits, nuts, wine and pork – with an annual import value of $2.75 billion, in retaliation for the U.S. steel and aluminum tariffs.

Public Hearing and Comments

USTR invites interested persons to submit written comments on the proposed tariff action. It will also conduct a public hearing to allow for testimony. The key dates are as follows:

  • April 23, 2018: Due date for filing requests to appear at the hearing, with a summary of expected testimony, and for filing pre-hearing submissions;
  • May 11, 2018: Due date for submitting written comments;
  • May 15, 2018: Public hearing at the U.S. International Trade Commission, 500 E Street, SW, Washington, D.C. 20436, beginning at 10:00 am;
  • May 22, 2018: Due date for submitting post-hearing rebuttal comments.

USTR requests comment on the following issues:

  • Whether specific products targeted for increased tariffs should be retained, removed or added to the list;
  • The level of increase, if any, on the rate of duty;
  • The aggregate level of trade to be covered by additional duties;
  • Whether imposing additional duties on a particular product would be practicable or effective to obtain elimination of China’s acts, policies and practices that are the subject of the Section 301 proceeding; and
  • Whether imposing additional duties on a particular product would cause disproportionate economic harm to U.S. interests.