ARTICLE
24 January 2025

Section 301: History And Overview

CM
Crowell & Moring LLP

Contributor

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Section 301 of the Trade Act of 1974 delegates to the Office of the United States Trade Representative (USTR) authority to investigate and respond to unfair foreign trade practices that could harm domestic interests.
China International Law

Section 301 of the Trade Act of 1974 delegates to the Office of the United States Trade Representative (USTR) authority to investigate and respond to unfair foreign trade practices that could harm domestic interests. Under Section 301, USTR can act against foreign countries that violate U.S. trade agreements or engage in acts that are "unjustifiable" or "unreasonable" and that burden U.S. commerce. Following a Section 301 investigation, USTR may impose new tariffs, withdraw or suspend trade agreement concessions, and negotiate binding agreements.

Since the law's enactment in 1974, applications of Section 301 have evolved. There have been 130 cases under Section 301 so far. Of these 130 cases, 35 investigations were initiated after the establishment of the World Trade Organization (WTO) in 1995. The number of initiated cases under Section 301 significantly decreased following the implementation of the Dispute Settlement Understanding (DSU) at the WTO, which provided a formal, rule-based process for settling trade disputes. Since 1995, the U.S. has mainly enforced its trade rights through WTO DSU, rather than through a formal Section 301 investigation.

In 2017, the Trump administration broadened the use Section 301 by using Section 301 to impose tariffs on China. USTR initiated an investigation on China's policies related to intellectual property, technology transfer, and innovation. Following the investigation's conclusion in 2018, USTR imposed tariffs ranging from 7.5% to 25% on China across four lists, 1-4A. This subjected approximately 75% of Chinese imports (with a total value of over 370 billion) to Section 301 tariffs. Outside of China, the Trump administration also initiated Section 301 investigations against the EU, France, and Vietnam.

Countries can retaliate in response to USTR's actions, such as by imposing retaliatory tariffs on U.S. exports. Although China has largely stood down in response to USTR's actions, China issued a series of retaliatory tariffs on US exports in 2018 following USTR's implementation of tariffs under Section 301. These retaliatory tariffs primarily targeted agricultural products.

Along with the new tariffs imposed on China, USTR opened an exclusion process in 2018, where exemptions were granted for specific import classifications under Section 301. USTR approved approximately 35% of initial exclusion requests from lists 1 and 2, 5% from list 3, and 7% from list 4A. In total, USTR granted over 2,200 initial exclusion requests, of which 549 were extended.

Until September 2024, the Biden administration largely maintained the Section 301 tariffs from the previous Trump administration. But in September 2024, USTR announced its final modifications on Section 301 tariff increases for Chinese imports during its statutory four-year review. The tariff hikes ranged from 25% and 100%, and impacted critical minerals, syringes and needles, electric vehicles, and solar panel cells. Many of these tariff increases went into effect in September, but some will go into effect in January 2025, such as tariff increases on semiconductors and rubber medical and surgical gloves. For more information on the USTR's final modifications, read Crowell's previous guidance here.

In December, USTR further modified tariff increases under Section 301 on Chinese-origin goods, announcing a 50% tariff increase on solar wafers and polysilicon and a 25% tariff increase on certain tungsten products. These tariff increases will go into effect in January 2025.

Moving forward, the use of Section 301 will likely be a key player in trade policy during the incoming Trump administration.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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