Administration to Review Section 301 Tariffs as Four Year Deadline Approaches

The United States Trade Representative (USTR) has issued required “60 day notices”, beginning the statutory process which requires that trade retaliation actions taken under Section 301 of the Trade Act of 1974 be reviewed after they have been in effect four (4) years. USTR is asking domestic “stakeholders” if they want the Administration to extend the current Section 301 retaliatory tariffs for Chinese goods, for products appearing on retaliation “List 1” ($34 billion in trade measures, effective July 6, 2018) and “List 2” ($16 billion in trade measures, effective August 23, 2018).

It should be stressed that USTR is not at this time seeking comments from importers and others who oppose extension of the Section 301 tariffs. As domestic interests request extension of tariffs, however, we expect that some oppositions will be filed in the comment portal.

The relevant statute, 19 U.S.C. §2417(c)(1), provides:

(c) Review of necessity

(1) If—

(A) a particular action has been taken under section 2411 of this title during any 4-year period, and

(B) neither the petitioner nor any representative of the domestic industry which benefits from such action has submitted to the Trade Representative during the last 60 days of such 4-year period a written request for the continuation of such action,

such action shall terminate at the close of such 4-year period.

The first step in the review process is the issuance of “60 day letters” to the stakeholders who petitioned for the Section 301 relief, asking if they have benefited from the relief and wish to see it extended. In this case, there were no petitioners – former USTR Robert Lighthizer “self-initiated” the Section 301 proceeding – but USTR is issuing a Federal Register notice asking interested domestic industries to express interest in extending the tariffs beyond the 4-year limit. It is also mailing the notice to all domestic parties who submitted comments supporting imposition of the tariffs.

USTR will open its Section 301 portal between May 7, and July 5, 2022, to receive requests to extend the List 1 actions. It will open the portal between June 24 and August 22, 2022 to receive requests to extend List 2 actions.

The issuance of the “60 day letters” imposes pressure on the Biden Administration, which to date has been loath to disturb the so-called “Trump Tariffs”, or to reopen an “exclusion process”, despite pleas from the business community, which has blamed the tariffs for helping to drive inflation. The Biden Administration would take political “ownership” of any tariffs extended beyond the current expiration dates.

The “List 3” tariffs, covering $200 billion in goods, are scheduled to expire in October, 2022, and USTR will likely send a new “60 day letter” at the appropriate time. The “List 4A” tariffs are not scheduled to expire until 2023.

The Administration also faces a June 30 deadline to report to the United States Court of International Trade concerning its handling of public comments leading to the issuance of the List 3 and List 4A tariffs. If the Administration does not provide an explanation demonstrating compliance with the requirements of the Administrative Procedure Act (APA), those tariffs may be set aside as invalid.

Please contact a Neville Peterson professional if you have any questions concerning these issues.