Ronald A Oleynik is a Partner in our Washington DC office
Farid Hekmat is an Associate in our Washington DC office.
President Donald Trump announced on June 15, 2018, that the United States would implement a 25 percent tariff on $50 billion worth of goods from China "that contain industrially significant technologies." The imposition of tariffs is the result of an investigation under Section 301 of the Trade Act of 1974, which empowers the president to counter unfair or discriminatory trade practices by U.S. trading partners.1
President Trump issued a memorandum in August 2017 instructing the Office of the U.S. Trade Representative (USTR) to initiate an investigation under Section 301 into whether China's acts, policies and practices associated with technology transfers, intellectual property and innovation were unreasonable or discriminatory, and were harming U.S. interests. Section 301 authorizes the president to take a range of actions – including the imposition of import duties, quotas and other import restrictions – upon finding that a trade partner is engaging in unfair practices.2 USTR found that China's acts, policies and practices consisted of unfair practices and, as a result, recommended the 25 percent tariff on a list of products.
USTR described China's acts, policies and practices as part of China's plan to seize "economic dominance of certain advanced technology sectors," and labeled the products subject to the new tariffs as "Made in China 2025."3 These products are covered in a list of 1,102 tariff lines issued by USTR that include the aerospace, information and communications technology, robotics, industrial machinery, new materials and automobile sectors.4
U.S. Customs and Border Protection (CBP) will begin collecting duties on an initial group of products on the list on July 6, 2018.This initial group of products consists of $34 billion worth of imports from China. According to USTR, companies interested in importing items from China subject to these tariffs will have an opportunity to request an exclusion of certain products from the additional duties.
The second group of products, worth $16 billion of Chinese imports, will undergo additional review. USTR will initiate a public notice and comment process. Once completed, USTR will issue a final determination announcing which of the products in the second group will be subject to additional tariffs.
Immediately following the White House announcement, China responded that it would retaliate by imposing its own tariffs. Effective July 6, 2018, China will impose a 25 percent tariff on 545 products imported from the U.S., including agricultural, automobile and seafood-related goods. Additionally, China announced it will impose tariffs on a second set of products at a later date.
Footnotes
1 19 U.S.C. §2411(a)-(b).
2 19 U.S.C. §2411(b).
3 See Section 301 Product List Fact Sheet, June 15, 2018
4 See USTR Issues Tariffs on Chinese Products in Response to Unfair Trade Practices, June 15, 2018
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