WASHINGTON — The Coalition for a Prosperous America (CPA) submitted comments to Ambassador Katherine Tai in support of continuing the Section 301 China Tariffs. The Office of the U.S. Trade Representative (USTR) requested comments for its four-year review of its actions regarding its Section 301 Investigation of China. CPA’s submission to USTR documents the benefits of the Section 301 tariffs and outlines specific actions that USTR should take to modify the tariffs to make them more effective.
“The tariffs have led to a large reduction in bilateral trade and a restructuring of trade flows between China and the U.S.,” CPA’s comment letter states. “Business in several industries cite the tariffs as a driving factor for reshoring manufacturing back to the U.S. Some examples include furniture, plastics, and apparel companies. The tariffs have increased the cost of production in China, and therefore incentivized production to reshore or onshore to the U.S. to avoid the tariff. Other benefits from reshoring production to the U.S. include lower transportation costs, fewer supply chain snafus, and greater reliability of delivery.
“The tariffs were critical in mitigating harm from China’s practices related to technology transfer, intellectual property and innovation,” CPA’s comment letter continues. “Namely, they helped slow China’s capture of U.S. domestic market share. It also boosted U.S. supply chain resiliency, by encouraging sourcing decisions outside of China prior to the Covid pandemic lockdowns. Throughout China’s ‘Zero Covid’ lockdowns, the U.S. economy was more resilient thanks to the Section 301 actions taken in 2018, which drove sourcing out of China.”
Last February, CPA 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. Lists 4A and 4B cover approximately $120B and $160B worth of goods respectively.
CPA’s submission to USTR once again called on the Biden administration to reinstate all Section 301 tariffs on China.
“The actions should be modified by acknowledging that China failed to meet the requirements of the Phase One deal, thus warranting returning the List 4A tariffs to 15% and canceling the suspension of the List 4B tariffs,” CPA’s comment letter asserts. “Furthermore, USTR should develop home-market valuation provisions as existed in prior U.S. Tariff Acts and apply those minimum valuation provisions to imports from China. This is essential to combat the rapid devaluation of China’s currency, which is limiting the effectiveness of the action. Finally, USTR should also work with the U.S. Treasury and U.S. Customs and Border Protection to reintroduce the rule denying Section 321 eligibility for goods subject to Section 301 tariffs. This is because after imposition of the Section 301 tariffs, many vendors in China began restructuring their shipments to assert eligibility under Section 321 and thus avoid Section 301 tariffs. This restructuring runs counter to the law and spirit of Section 321, and undermines the Section 301 action.”
Read CPA’s full comment letter to USTR here.
