The United States Trade Representative (UTSR) has formally approved modifications to Section 301 Chinese tariffs that had previously been under review by the organization. UTSR says it received more than 1,100 comments from the public in response to the proposed modifications – announced May 28 – which were factored into the review process before final approval.

  • After reviewing the public comments, the modifications were mostly still adopted by the USTR with only minor changes as a result.  
  • A significant number of the changes will officially go into effect September 27, two weeks from the official announcement.

“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,” says United States Trade Representative 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.”

The tariff increases are expected to affect $18 billion worth of imports from China.

Background Of Tariff Modifications

In late May, the USTR made public the long-awaited report of its four-year investigation into Section 301 Chinese tariffs that were initially put in place by the Trump administration in 2017. These tariffs were established after an investigation concerning China’s trade practices, concluding that the country was guilty of several practices deemed suspicious or to unfairly burden the U.S.

Temporary exclusions for several categories of goods had been granted concerning the tariffs, but on May 31 many of those exclusions expired, affecting hundreds of products.

U.S. businesses ranging across myriad industries awaited the results of the four-year investigation, largely hoping that it might bring findings that would justify easing the Chinese tariffs on products relied upon by many small and large businesses. Those hopes were dashed back in May.

  • “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 investigation reported. “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 report also stated that the tariffs “have had small negative effects on U.S. aggregate economic welfare, positive impacts on U.S. production,” a claim that would likely be debated by many businesses or industries.

The Chinese tariffs that are maintained or increased following the modifications include but are not limited to:

  • Tariffs on face masks produced in China have been doubled.
  • 100% tariffs on Chinese electric vehicles.
  • 50% tariffs on Chinese semiconductors.
  • 25% tariffs on Chinese steel, aluminum and batteries.

The Biden administration has also proposed a rule that would affect the U.S. duty-free clause for shipments valued under the $800 “de minimis” threshold that it says has been exploited by Chinese e-commerce companies, such as Temu. The rule would require more information for such small shipments to better protect against harmful chemicals or fentanyl entering the U.S.

Promo Perspective

Upon the announcement of the tariff increases, Ben Zhang, president and CEO of Greater Pacific – ranked the No. 68 supplier in the 2024 PPAI 100 – argued that “tariffs just increase prices, create inflation and harm the U.S. consumer.”

“Who’s really punished by tariffs? American companies, not Chinese manufacturers,” Zhang says.

Thomas Goos, MAS, president of Image Source – ranked the No. 48 distributor in the inaugural PPAI 100 – said that the modifications are bound to have some affect on the promo world.

“This industry relies on significant manufacturing in China,” said Goos. “There will be increased costs from these new tariffs, and we could lose sales. It’s not good for our industry.”

Americans for Free Trade, a coalition of American businesses, trade organizations and workers united against tariffs, issued the following statement in response to the approved modifications:

“Americans for Free Trade is extremely disappointed that the Biden administration has once again prioritized protecting specific industries rather than the broader needs of the U.S. economy, businesses, workers and consumers. Simply put, these tariffs are additional taxes on Americans. Maintaining the current tariffs and increasing some key categories will only lead to increased costs for companies and, in turn, higher prices for consumers. Inflation is finally on a downward trend, and tariffs counter this economic progress.”

  • The coalition also renewed its call for a “more robust and transparent exclusions process” for all products covered by the tariffs.