Trade Alert: USTR Finalizes Tariff Increases on Chinese Imports from Strategic Sectors
Most tariff increases take effect September 27.
On September 13, 2024, the U.S. Trade Representative (USTR) finalized the additional Section 301 Tariffs on $18 billion in goods from China. The final determination largely adopted without change the proposed modifications announced in May 2024.
The USTR’s determination comes after a review of the Section 301 tariffs that former President Donald Trump imposed in 2018. The USTR detailed the tariffs in its report on its four-year review of China-related tariffs under Section 301 of the Trade Act of 1974, which begin in May 2022.
The USTR aims to target “certain products from China in strategic sectors” and determined that the 14 product groups were those at risk of Chinese dominance or were sectors in which the United States had made domestic investment. Chinese officials have expressed opposition to the tariffs. “The United States should immediately correct its wrong practices and cancel all tariff increases on China,” the Ministry of Commerce said.
Most of the tariff increases take effect on September 27, 2024. Tariffs on computer chips take effect in 2025, and tariffs on natural graphite take effect in 2026. The increased tariffs are estimated to raise $3.6 billion in revenue.
Product Categories
The USTR will increase tariffs under Section 301 on the following Chinese-origin goods:
Steel and aluminum– 2024
Steel and aluminum: Increase to 25% in 2024.
Electric vehicles – 2024
Electric vehicles: Increase from 25% to 100% in 2024.
Batteries and battery parts – 2024 and 2026
Lithium-ion electrical vehicle batteries: Increase from 7.5% to 25% in 2024.
Battery parts (non-lithium-ion batteries): Increase from 7.5% to 25% in 2024.
Lithium-ion non-electrical vehicle batteries: Increase from 7.5% to 25% in 2026.
Electronics – 2025 and 2026
Semiconductors: Increase from 25% to 50% in 2025.
Permanent magnets: Increase from 0% to 25% in 2026.
Solar – 2024
Solar cells (whether or not assembled into modules): Increase from 25% to 50% in 2024.
Cranes – 2024
Ship-to-shore cranes: Increase from 0% to 25% in 2024 (with exclusions for cranes that fulfill contracts executed prior to May 14, 2024, and that enter the United States prior to May 14, 2026).
Graphite – 2026
Natural graphite: Increase from 0% to 25% in 2026.
Critical Minerals – 2024
Tariff rates will increase from 0% to 25% on critical minerals in 2024. These include:
Manganese ores and concentrates
Cobalt ores and concentrates
Aluminum ores and concentrate
Zinc ores and concentrates
Chromium ores and concentrates
Tungsten concentrates
Tungsten oxides
Tungstates
Tungsten carbides
Tritium
Indium
Ferronickel
Ferroniobium
Indium
Tin
Tantalum
Other radioactive elements
Medical Products – 2026
Tariffs will increase on face masks, medical gloves, and needle syringes in 2026.
Face masks: Tariff rates will increase from 0% to 25% in 2024 and to 50% in 2026.
Medical gloves: Increase to 50% in 2025 and 100% in 2026.
Syringes and needles: Increase from 0% to 100% in 2024. There is an exclusion for enteral syringes through January 1, 2026.
The tariff increases scheduled for 2024 are applicable to products imported on or after September 27, 2024. The tariff increases scheduled for 2025 are applicable to products imported on or after January 1, 2025, and the tariff increases scheduled for 2026 are applicable to products imported on or after January 1, 2026.
Exclusions
The USTR largely adopted its proposed list of exclusions for 312 subheadings. It added five subheadings for temporary exclusions for manufacturing machinery.
Temporary Solar Exclusions
The USTR made 14 temporary exclusions for certain solar manufacturing equipment. The USTR originally proposed 19 exclusions, which included five exclusions for equipment to manufacture solar modules, six exclusions for equipment to manufacture solar cells, and eight exclusions for equipment to manufacture solar wafers. For the final determination, the USTR did not adopt the five exclusions covering solar manufacturing equipment for modules. The exclusions are retroactive and applicable to products imported on or after January 1, 2024 through May 31, 2025.
Immediate Actions for Businesses
In response to the USTR report, companies involved in U.S.-China trade, particularly those in the EV and solar industries, should take several actions:
Evaluate the impact of any tariffs on supply chain;
Determine alternative sourcing or inputs if necessary;
Evaluate tariff reduction strategies;
Monitor the USTR exclusion process for imported goods;
Make an exclusion request for key imported products;
Biden Tariff Policy
With a focus on protecting domestic EV manufacturing, semiconductors, and batteries, the Biden administration’s tariffs are both higher and more targeted than those implemented under the Trump administration. In keeping with “Bidenomics,” the tariffs are part of the policy to support a transition to “green” energy, support the U.S. semiconductor industry, and promote infrastructure development. The Biden administration’s tariffs are also aimed at protecting emerging industries. For example, although there are few Chinese EVs imported into the United States, the Biden administration’s tariffs aim to keep them out entirely.