U.S. finalizes Section 301 tariffs, doubling rate on solar panels (original) (raw)

The cost of doing business with China is about to go up.

After a fourth-month review process that garnered more than 1,100 public comments, the Office of the United States Trade Representative (USTR) has announced final modifications to the proposed Section 301 tariff actions concerning the People’s Republic of China’s (PRC) acts, policies, and practices related to technology transfer, intellectual property, and innovation.

The proposed modifications announced in May 2024 were largely adopted with a few updates to “strengthen the actions to protect American businesses and workers from China’s unfair trade practices,” per the USTR.

“Today’s finalized tariff increases will target the harmful policies and practices of the People’s Republic of China that continue to impact American workers and businesses,” said Ambassador Katherine Tai. “These actions underscore the Biden-Harris Administration’s commitment to standing up for American workers and businesses in the face of unfair trade practices.”

Tariff increases in 2024 will apply to products entered for consumption or withdrawn from warehouse for consumption on or after September 27, 2024. Tariff increases in 2025 and 2026 apply to products that are entered for consumption or withdrawn from warehouse for consumption on or after January 1 of the corresponding year.

Products subjected to increased tariffs include:

Is this even working?

Based on information obtained during the review, including the public comments, USTR prepared a comprehensive report that included findings on the effectiveness of previous tariff actions. The report, Four-Year Review of Actions Taken in the Section 301 Investigation: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, was published on May 14, 2024, and is available on the USTR website.

In the report, the USTR says it found the Section 301 actions have been effective in encouraging China 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.

China 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, the USTR contends. Instead of pursuing fundamental reform, China has persisted, and even become more aggressive, particularly through cyber intrusions and cybertheft, in its attempts to acquire and absorb foreign technology, which further burden or restrict U.S. commerce.

The USTR found the duties have had small negative effects on U.S. aggregate economic welfare, positive impacts on U.S. production in the ten sectors most directly affected by the duties, and minimal impacts on economy-wide prices and employment. They have generally contributed to reducing U.S. imports of goods from China and increasing imports from alternate sources, including U.S. allies and partners, thereby potentially supporting U.S. supply chain diversification and resilience.

As noted in USTR’s Report, China dominates the manufacturing capacity of polysilicon and wafers, accounting for 93% of polysilicon manufacturing capacity and 95% of wafer capacity. This will likely undermine new investments in domestic manufacturing, impede the resiliency of U.S. supply chains for solar cells and semiconductors, and undermine the effectiveness of the tariffs on solar cells and 29 semiconductors.