WASHINGTON – United States Trade Representative Katherine Tai today released the following statement concerning the statutory review of the tariff actions in the Section 301 investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation:
“Today, I am following through on my commitment to stand up to the People’s Republic of China’s unfair trade practices by issuing a formal proposal to modify the tariff actions,” said Ambassador Katherine Tai. “The President has directed me to make substantial tariff increases on targeted, strategic products, and this is an important step to carry out that vision. The President and I will continue to fight for American workers, and for our economic future and national security.”
In a Report issued last week, the Trade Representative found that the People’s Republic of China (PRC) has not eliminated its technology transfer related acts, policies, and practices, which continue to impose a burden or restriction on U.S. commerce. The Report also found that the PRC has persisted, and in some cases become aggressive, including through cyber intrusions and cybertheft, in its attempts to acquire and absorb foreign technology. Based on these findings, Ambassador Tai recommended a series of actions to President Biden to further encourage the PRC to eliminate its harmful, acts, policies, and practices.
On May 14, 2024, after considering the advice of the Trade Representative, President Biden directed the Trade Representative to take a number of actions.
In accordance with President Biden’s direction, Ambassador Tai is issuing a formal proposal in the Federal Register to increase tariffs on specific products in strategic sectors. The notice also establishes the framework for an exclusion process for machinery, and proposes temporary exclusions for 19 tariff lines for solar manufacturing equipment. The notice establishes a 30-day period for public comment on these modifications.
Background
In May 2022, USTR commenced the statutory four-year review process by notifying representatives of domestic industries that benefit from the tariff actions of the possible termination of those actions and of the opportunity for the representatives to request continuation. In September 2022, USTR announced that because requests for continuation were received, the tariff actions had not terminated and USTR would conduct a review of the tariff actions. USTR opened a docket on November 15, 2022, for interested persons to submit comments with respect to a number of considerations concerning the review. USTR received nearly 1,500 comments.
As part of the statutory review process, throughout 2023 and early 2024, USTR and the Section 301 Committee (a staff-level body of the USTR-led, interagency Trade Policy Staff Committee) held numerous meetings with agency experts concerning the review and the comments received.
Specifically, the Report concludes:
The Section 301 actions have been effective in encouraging the PRC to take steps toward eliminating some of its technology transfer-related acts, policies, and practices and have reduced some of the exposure of U.S. persons and businesses to these technology transfer-related acts, policies, and practices.
The PRC has not eliminated many of its technology transfer-related acts, policies, and practices, which continue to impose a burden or restriction on U.S. commerce. Instead of pursuing fundamental reform, the PRC has persisted, and in some cases become aggressive, including through cyber intrusions and cybertheft, in its attempts to acquire and absorb foreign technology, which further burden or restrict U.S. commerce.
Economic analyses generally find that tariffs (particularly PRC retaliation) have had small negative effects on U.S. aggregate economic welfare, positive impacts on U.S. production in the 10 sectors most directly affected by the tariffs, and minimal impacts on economy-wide prices and employment.
Negative effects on the United States are particularly associated with retaliatory tariffs that the PRC has applied to U.S. exports.
Critically, these analyses examine the tariff actions as isolated policy measures without reference to the policy landscape that may be reinforcing or undermining the effects of the tariffs.
Economic analyses, including the principal U.S. Government analysis published by the U.S. International Trade Commission, generally find that the Section 301 tariffs have contributed to reducing U.S. imports of goods from the PRC and increasing imports from alternate sources, including U.S. allies and partners, thereby potentially supporting U.S. supply chain diversification and resilience.
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