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Narrowness of Section 301 Exclusions Lamented; Equipment Choices Debated

Solar manufacturers asked for retroactive relief on Section 301 tariffs on manufacturing equipment, buyers and producers disagreed on medical product tariffs and many manufacturers supported the equipment listed, and asked for more equipment or parts for equipment that was not identified by the Office of the U.S. Trade Representative as it recommended a new round of exclusions limited to manufacturing equipment.

One of the most prominent targets of comments to USTR, which closed June 28, was the hike in Section 301 tariffs from 7.5% to 25% on Jan. 1, 2026, for lithium-ion batteries outside the automotive sector -- a change that would affect battery replacement in a wide variety of goods, from electric weed-whackers and lawn mowers to laptops, wireless earbuds and much more (see 2407010055).

A number of auto industry players also expressed concern about higher tariffs on mature chips and on new tariffs on EV battery upstream materials such as graphite and components that go into cells (see 2407010056), though a coalition that represents firms trying to produce those upstream materials supported the hikes, and asked for a broader scope.

The American Medical Manufacturers Association asked USTR for higher Section 301 tariffs on face masks, gloves, syringes, and needles of tariff subheadings 6307.90, 4015.12, 4015.19, 9018.31 and 9018.32 -- at least 100%.

The agency had proposed 25% on masks and surgical gloves and 50% on syringes and needles. The trade group said that would not be enough to spur domestic production. It also proposed delaying the glove tariff hike until Jan. 1, 2026, and AMMA argued that hike should come Aug. 1.

The National Council of Textile Organizations supported tariff hikes on 6307.90.9850 and 4015.1210.

The Dental Trade Alliance wrote that it is against tariffs on masks, gloves, needles and syringes. However, it supports tariffs for exclusions on nine categories of manufacturing equipment, including 3D printers.

The Federation of American Hospitals,which represents more than 1,000 for-profit hospitals, wrote: "While the intention behind the Tariff Modifications is understandable, the potential negative impacts on American hospital medical supply chains cannot be overlooked."

It asked that healthcare goods not face hikes; if they do, there should be a multi-year delay before they go into effect, and if that's not possible, the rate should be "substantially lower" and "phased in."

The National Association for Home Care & Hospice said they may never be reimbursed by Medicaid for the higher costs of masks and gloves due to the tariffs and trade diversion to higher-cost producers.

For solar, some firms asked for more equipment to be covered, several asked for retroactive relief for tariffs already paid on manufacturing equipment, and some asked for breaks on other inputs. The USTR is not proposing tariff exclusions for any manufacturing inputs, but that didn't stop many trade groups and firms from asking for such a policy.

The American Alliance for Solar Manufacturing wrote that hiking the tariff on solar cells from 25% to 50% will enhance the effectiveness of Section 301, and said it supports all 19 manufacturing equipment exclusions.

Solar Energies Manufacturers for America said the solar manufacturing equipment tariff exclusions should be retroactive to Jan. 1, 2023. It said the solar manufacturing equipment list should include 8486.10.0000 Wafer Automated Optical Inspection Sorter. And it asked for tariff breaks on 13 inputs used to make solar panels.

Suniva also said the equipment exclusions should be retroactive, but to Jan. 1, 2024. "Suniva has already spent considerable funds to re-start domestic CSPV cell production -- which has resulted in having to pay millions of U.S. dollars in China 301 tariffs to import Chinese cell manufacturing equipment not available elsewhere," the company wrote. It said that laser doping systems classified under HTS 8456.11.1010 should be added to the list of solar manufacturing equipment that is excluded from the China Section 301 tariffs.

Auxin Solar wrote that it would also "directly benefit from retroactive application of the tariff exclusions for solar manufacturing equipment." It asked USTR to consider adding tariff classification HTSUS subheading 8486.90.00.00, which covers parts of solar manufacturing equipment.

However, the US-EU Solar Manufacturers Committee,a group of German companies, a U.S. and a Korean firm that make solar manufacturing equipment, argued against any exclusions.

The Alliance for American Manufacturing cautioned that relying on China for solar manufacturing equipment is risky. Any exclusions should be limited, both in duration and scope "to provide incentives for the expanded availability of non-China-sourced production machinery."

The Association of Equipment Manufacturers,with 1,000 member companies in the construction, agriculture, utility, forestry, and mining sectors, asked for a broader exclusion process to include imported inputs, but wrote, "in the meantime, all products listed in Annex B of this notice should be eligible for an exclusion."

Many manufacturers said Section 301 tariffs on manufacturing inputs cut into their ability to maintain market share at home and abroad. They said the tariffs have led to job losses. And some complained that while the tariffs are supposed to counteract intellectual property theft, the goods they import from China are from factories they own.

Whirlpool, which has 19,000 U.S. employees, including approximately 14,000 manufacturing employees, argued that Asian appliance makers can import low-cost Chinese components and Whirlpool cannot, so it's losing its competitive advantage. "The current structure of Section 301 and other duties incentivizes the outsourcing of U.S. appliance manufacturing jobs." the company wrote.

The National Association of Manufacturers wrote that since 2019, firms have paid roughly $25 billion every year in tariffs to import industrial inputs from China for manufacturing. Similarly, the U.S.-China Business Council argued that manufacturing inputs should be eligible for exclusions. It said a USCBC member company "has paid tens of millions of dollars in tariffs for low-end inputs used in manufacturing high-end mainframe computers in the United States."

Hamilton Sundstrand,the American Association of Exporters and Importers,and Pratt & Whitney asked that $250.8 million worth of Chinese aerospace products be exempted, because the United States agreed at the World Trade Organization to eliminate tariffs on civil aviation inputs. It estimated that aerospace manufacturers paid $58 million in tariffs on these goods in 2023.

Some producers of raw materials hailed hikes in metals that USTR announced.

U.S. Steel said 25% tariffs on Chinese tin mill is not enough -- it needs to be 100%, because even with a 25% tariff, Chinese tin mill is the cheapest available.

The United Steelworkers union supported that argument, and also said: "USW has also received a request from an employer who has indicated that certain materials are currently not domestically produced, and alternatives are not feasibly available. Johnson Matthey, which currently employs USW members in Pennsylvania, has provided background to the union highlighting that their synthetic zeolite material process is a proprietary wash coat solution that is not making enough quantities domestically to meet U.S. based original equipment manufacturer (OEM) technical specifications."

Global Tungsten & Powders, a 500-employee firm, cheered the addition of 2611.00.60, tungsten concentrates. But it said subheadings 8101.99.10, 8101.99.80 and 8101.94.00 (downstream sintered and/or wrought tungsten/tungsten alloy products) should be subject to Section 301 tariffs.

It also said that U.S. tungsten refiners are very dependent on scrap, but said that it believes Chinese exports are listing shipments as 8101.97 tungsten scrap, but it's really "sintered pure tungsten pucks, or bars or rods, or they are sintered or wrought tungsten alloyed parts, or they are sintered tungsten carbide rods, blanks, or other shapes. China has been taking advantage of this HTS code’s lower duty for quite some time. RMA recommends monitoring and enforcement is desperately needed by CBP/other USG agencies and the RMA recommends adding the subheading 8101.97 to the list of Section 301 tariffs with a duty rate of 50%. Otherwise, Chinese companies will dump more product into this category when all the other tariffs take effect."

Buffalo Tungsten, with 50 employees, hailed the higher tariff on tungsten powders.

The Beer Institute opposes a 25% tariff on aluminum cansheet bodystock, 7606.12.3045; aluminum can lid stock -- 7606.12.3055; other aluminum cansheet -- 7606.12.3090; aluminum used beverage container scrap -- 7602.00.0030; aluminum waste and scrap other than used beverage container scrap -- 7602.00.0090; aluminum slugs -- 7616.99 and 7606.91; and low purity (non-military) aluminum ingot -- 7601.10.6000. If USTR is not willing to do that, it asked for contracts that predate the announcement to be excepted.

Can Manufacturers Institute asked USTR to hike Section 301 tariffs on HTS headings 7310.21.0050, 7310.29.0065, 7323.99.5060, 7612.90.1030, 7612.90.1060 and 8309.90.000; it said aluminum can imports from China have skyrocketed.

Many trade groups and companies endorsed specific items suggested by USTR for manufacturing equipment in Annex B, and many also suggested other manufacturing equipment or parts used for that equipment that weren't on the annex, including Motor and Equipment Manufacturers Association, Hamilton Beach,the Semiconductor Industry Association, Mitsubishi Power Americas, Eastman Kodak and Parker Hannifin. These firms have thousands or tens of thousands of employees.

Harbor Freight Tools,which has 27,800 employees in the U.S., named 11 machines in chapter 84 and 8515.39.00 that it supports.

Trane Technologies, which has 27,000 employees, asked for two items related to industrial chillers.

"U.S. demand for large water-cooled chillers continues to rapidly increase, driven by the need from industrial manufacturers for process cooling, including semiconductor chip fabricators, EV/battery manufacturers, and data processing centers. The entire market is witnessing unprecedented demand, and it is critical for reduced energy consumption and limiting greenhouse gas emissions that these systems are available versus other alternative technologies," the company wrote.

AdvaMed, the trade group that represents medical device manufacturers, endorsed eight pieces of equipment USTR listed in Annex B, and suggested 15 others for the list. Ingersoll Rand, which employs 6,400 in the U.S., suggested 29 entries for exclusions.

But not all manufacturing equipment had unanimous support. While GE Healthcare,which has 17,000 employees, endorsed 8419.50.50, heat exchange units it said support production of industrial gases, the Coalition for a Prosperous America opposes the same item.

"This is a catch-all subheading, and captures articles produced by domestic custom fabricators," CPA said, and should not get a tariff break. "If there is to be an exclusion, the petitioner should have to demonstrate that they have solicited the work to custom fabricators outside of China, and a rebuttal process should be provided."

Some small and microbusinesses also submitted comments on which machinery should get tariff exclusions.

Phillips Manufacturing, with 335 employees, said USTR shouldn't include horizontal lathes, under 8458.11.00, because those machine tools have American production. It also complained that Haas Automation, the largest domestic machine tools builder, pays tariffs on components it sources to build tools that compete with Chinese tools that the U.S. is proposing receive tariff exclusions.

It asked the agency to add six other tariff lines to Annex B in 8466 and 8483 subheadings.

Haas Automation, which has 1,400 employees, also advocated for itself, asking for components under HTS 8466.93.98 to be on the exclusion list. "Failing to include parts of machine tools and similar equipment on the list of items eligible for exemptions would force domestic machine tool manufactures such as Haas in the incongruous position of having to pay Section 301 tariffs on critical machine tool components imported from China while imported Chinese machine tools would, in their entirety, be exempt from such tariffs."

Timco Machine Tools, which has 15 employees, said there shouldn't be an exclusion for 8457.10.00, because Haas Automation makes CNC machines under that category. "Including this tariff code will hurt our American business because Haas machines will have to compete with cheaper Chinese imports manufactured by state-owned enterprises," Timco's owner wrote.

Mitsubishi Electric Power Products, which employs 1,200 in the U.S., complained that an exclusion it had since 2019 on a spring input from its own Chinese factory is ending, and they will have to pay a 25% tariff on it.

"The parts have no value to any other entity other than Pennsylvania-based Mitsubishi Electric Power Products. They cannot be incorporated into any other products in China or elsewhere. It serves no purpose other than to add to the manufacturing costs of a longstanding Pennsylvania company that provides critical grid infrastructure to U.S. utilities," the company said.

Eaton, with 27,000 employees, also complained about a tariff hike on an aluminum component it makes at its own Chinese factory.

Tube Forgings of America told the agency it has a Section 232 exclusion on a product that USTR is proposing to hike tariffs on. "The substantial increase in production costs from a tariff increase, coupled with severe price competition from imported butt-weld pipe fittings would force TFA to change its approach to manufacturing, resulting in a reduction of TFA's production workforce of about 20%."

Finally, the Citizens Trade Campaign broadly endorsed the administration's approach. The group submitted a letter with 2,167 signatures that said: "Allowing China or any other single country or region to dominate the production of strategic technologies such as semiconductors, long-storage batteries, solar panels, automobiles and others would eventually lead to higher prices, increased supply chain disruptions and stifled innovation. As such, President [Joe] Biden’s continued leadership in fighting the monopolization of these technologies is the right move for workers, consumers and the environment.

"The Biden tariffs are strong, smart and strategic, and I back the administration's plan to implement them quickly."