WASHINGTON — The Coalition for a Prosperous America (CPA) today called on the Biden administration to fully implement all tariffs the U.S. government imposed on China pursuant to Section 301 of the 1974 Trade Act in light of China’s violation of the Phase One deal. As part of this enforceable agreement, China pledged to increase its purchases of U.S. agricultural, manufactured, and energy goods. However, China was more than one-third short of its pledges—purchasing just 63 percent of what was promised under the Phase One deal. In exchange for China’s commitments under the Phase One deal, the United States agreed to lower or suspend implementation of the final tranche of Section 301 tariffs in December 2019, known formally as Lists 4A and 4B.
Last October, U.S. Trade Representative (USTR) Katherine Tai announced that China violated the Phase One deal. This week, U.S. Secretary of Commerce Gina Raimondo said that the Biden administration would hold China accountable for failing to meet its commitments under the Phase One deal.
“CPA strongly believes the Biden administration should immediately and fully impose all 301 tariffs to hold China accountable for, once again, violating an international agreement,” said Zach Mottl, Chairman of CPA. “For decades, China has engaged in massive state-subsidization of its industries, stolen Intellectual Property, used forced labor, shown little regard for environmental laws, and consistently violated international agreements. The goals of the Phase One deal required structural reforms and other changes to China’s economic and trade regime, however it is now clear that China has no interest in complying. Now that the Biden administration has confirmed China is violating the agreement, the 301 tariffs for products covered under Lists 4A and 4B should snap back to their original levels.”
Background:
The U.S. government imposed tariffs on imports from China pursuant to Section 301. These tariffs were divided into four tranches, detailed in the “Lists” below, which cover various categories of goods. The first three tranches, Lists 1, 2, and 3, were imposed between June 2018 and May 2019.
On August 17, 2019, USTR announced that the tariffs to date were “insufficient to obtain the elimination of China’s unfair and harmful policies” and they announced that List 4 tariffs would be going into effect on December 15, 2019. However, as part of the Phase One deal with China, USTR suspended the planned implementation of List 4.
- List 1 covers 818 product categories worth approximately $34 billion in imports. In July 2018, USTR imposed a tariff of 25 percent on List 1 merchandise, according to USTR.
- List 2 covers 279 product categories worth approximately $16 billion in imports In August 2018, USTR imposed a tariff of 25 percent on List 2 merchandise.
- List 3 covers 5,733 product categories worth approximately $200 billion in imports. In September 2018, USTR imposed a tariff of 10 percent on List 3 merchandise. In May 2019, it increased the tariff rate to 25 percent.
- List 4: Together, List 4 is the biggest, covering $300 billion in imports. It was divided into a List 4A and List 4B. In December 2019, USTR suspended the imposition of tariffs for List 4B and imposed the List 4A tariffs at just 7.5%, as opposed to the planned 15% tariff.
4.1. List 4A covers 3,207 product categories worth approximately $120 billion in imports, according to USTR.
4.2. List 4B covers 538 product categories worth approximately $160 billion in imports, according to USTR.
CPA is calling on USTR to take the necessary actions to impose the List 4B tariffs and raise the List 4A tariffs to the originally planned level of 15 percent.
