In a move that underscores ongoing tensions between the United States and China, the Office of the U.S. Trade Representative (“USTR”) announced on May 14, 2024 its intention to add or increase tariffs on select Chinese-origin products.  Accompanying the USTR announcement is a 193-page report assessing the effectiveness of Section 301 tariffs.  While acknowledging some progress in curbing China’s technology transfer practices, the report highlights persistent challenges and increased burdens on U.S. commerce.  Nevertheless, USTR sees tariffs as a tool to exert leverage and spur China to address outstanding issues.

    The proposed tariffs target products across several strategic sectors, including the following:

• • Battery parts (non-lithium-ion batteries) – Increase rate to 25% in 2024

• • Electric vehicles – Increase rate to 100% in 2024

• • Facemasks – Increase rate to 25% in 2024

• • Lithium-ion electrical vehicle batteries – Increase rate to 25% in 2024

• • Lithium-ion non-electrical vehicle batteries – Increase rate to 25% in 2026

• • Medical gloves – Increase rate to 25% in 2026

• • Natural graphite – Increase rate to 25% in 2026

• • Other critical minerals – Increase rate to 25% in 2024

• • Permanent magnets – Increase rate to 25% in 2026

• • Semiconductors – Increase rate to 50% in 2025

• • Ship to shore cranes – Increase rate to 25% in 2024

• • Solar cells (whether or not assembled into modules) – Increase rate to 50% in 2024

• • Steel and aluminum products – Increase rate to 25% in 2024

• • Syringes and needles – Increase rate to 50% in 2024

    These adjustments signal a robust stance by the Biden Administration in its efforts to safeguard American workers and companies.  The proposal indicates the Biden Administration’s commitment to maintaining Section 301 tariffs and a departure from calls to reduce or eliminate tariffs on certain products.

    Beyond tariff increases, the USTR report recommends various measures, including establishing exclusion processes, bolstering enforcement efforts, enhancing collaboration with private entities, and exploring supply chain diversification away from China.  These recommendations underscore a multifaceted approach aimed at reshaping trade dynamics.

    Despite the absence of a definitive list of affected products in today’s announcement, interested parties can anticipate forthcoming opportunities to provide feedback on the proposed tariff modifications.  Our firm will continue to monitor these developments closely and is prepared to advise clients on how to respond to the latest developments.