China Tariffs: Section 301 Frequently Asked Questions

Section 301 Background:

Under Section 301 of the Trade Act of 1974, the United States Trade Representative (USTR) initiated an investigation to determine whether China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation are unreasonable, unjustifiable, or discriminatory and burden or restrict U.S. commerce.

  • Following a thorough analysis of available evidence, USTR, with the assistance of the inter-agency Section 301 committee, prepared findings showing that the acts, policies, and practices of the Chinese government related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.
    • China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to force or pressure technology transfers from American companies.
    • China uses discriminatory licensing processes to transfer technologies from U.S. companies to Chinese companies.
    • China directs and facilitates investments and acquisitions which generate large-scale technology transfer.
    • China conducts and supports cyber intrusions into U.S. computer networks to gain access to valuable business information.
  • An interagency team of subject matter experts and economists’ estimates that China’s policies result in harm to the U.S. economy of at least $50 billion per year. 

When did Section 301 duties become effective?

  • Originally July 6, 2018. 

What does Section currently 301 cover?

  • Over 6,874 eight-digit harmonized tariff subheadings.
  • Current list published to the USTR’s website as “List 1.”
  • Current list published to the USTR’s website as “List 2.”
  • Current list published to the USTR’s website “List 3”
    • Began September 24th, 2018 at 10 percent duty
    • Modified on May 10th, 2019 at 25 percent duty

Are more Section 301 tariffs expected?

  • Yes, a proposed “List 4” is published on the USTR website
  • A public hearing is scheduled on June 17th, 2019 

Are there additional tariff reporting elements for items subject to Section 301?

  • In addition to the reporting of the typical Chapter 1 through 97 Harmonized Tariff Schedule classification, 9903.88.01 is required on “List 1.”
  • In addition to the reporting of the typical Chapter 1 through 97 Harmonized Tariff Schedule classification, 9903.88.02 is required on “List 2.”
  • In addition to the reporting of the typical Chapter 1 through 97 Harmonized Tariff Schedule classification, 9903.88.03 or 9903.88.04 is required on “List 3.” 

What are the duty amounts for Section 301?

  • 25% ad valorem for List 1
  • 25% ad valorem for List 2
  • 25% ad valorem for List 3
  • Additional to any “normal” duties, taxes, AD/CVD due.

What countries are covered by 301?

  • Section 301 duties currently only apply to products of China.
  • Based on country of origin, not country of export. 

Are Section 301 duties due on goods covered by a Trade Preference Programs?

  • Products from China subject to the Section 301 that are eligible for special tariff treatment under General Note 3(c)(i) shall be subject the additional 25% ad valorem The use of a trade preference program will not provide relief from Section 301 duties. 

Are goods entered under Section 301 eligible for drawback?

  • Section 301 duties are eligible for duty drawback.