Background

The Trump administration is taking a tough line on further exclusions from the Section 301 tariffs on imports from China as well as extensions of those exclusions already granted. Many exclusions have recently expired and those that have been extended are only slated to remain in place for a few months.

 

In response to written questions from members of the Senate Finance and House Ways and Means committees, U.S. Trade Representative Robert Lighthizer rejected or sidestepped calls for additional relief from the tariffs as U.S. companies struggle to deal with the COVID-19 pandemic. While acknowledging the “severe economic effect” of this crisis on small and medium-sized businesses, he indicated that Chinese practices that “cause severe economic harm to U.S. interests, and in the long term, will undermine the competitiveness of the U.S. economy” are a bigger concern and that the tariffs will remain in place in an effort to eliminate those practices. He applied a similar rationale to the Section 232 tariffs on steel and aluminum, indicating that the threat to U.S. national security they are designed to address is a larger consideration than the costs they are imposing on U.S. companies and workers.

 

Lighthizer appeared to reject suggestions that the administration evaluate and mitigate the impacts the tariffs are having on U.S. companies and to instead put the onus on them to adjust. He declined to answer a question on whether USTR has collected data or performed analyses of those impacts and instead emphasized that “any U.S.-based manufacturer believing itself hurt” by the tariffs can request an exclusion. He also noted that one of the factors USTR examines in determining whether to extend an exclusion is “the efforts, if any, the importers or U.S. purchasers have undertaken since imposition of the additional duties to source the product from the United States.” Considering that most requests for extensions have so far been denied, it would seem USTR believes those efforts have been lacking. It is therefore unsurprising that Lighthizer rejected the idea of automatically extending exclusions to give companies more time to make supply chain adjustments, though he did say the administration “has not decided whether to possibly extend again the exclusions extended until the end of 2020.”

 

Lighthizer also played down arguments that the Section 301 tariffs have limited the U.S.’ ability to respond to the pandemic. Numerous medical and health-related products were excluded from those tariffs from the star, he said, and numerous other products identified by the Department of Health and Human Services as relevant to the response to COVID-19 were later excluded. He asserted that out of the 112 tariff lines listed in a June 2020 International Trade Commission report as important for the pandemic response, “69 were either never subject to the 301 tariffs or have been excluded entirely, and an additional 18 lines have one or more product exclusions.” He also indicated that those tariffs that were imposed on personal protective equipment will remain in place because “we want to avoid doing anything that might incentivize imports or undercut the competitiveness” of domestic producers of these goods, many of whom have just started production.

Copyright © 2020 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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