The Court of International Trade in a July 20 opinion redenominated the U.S.'s counterclaim in a customs case brought by importer Cyber Power Systems as a defense, ruling that the U.S. does not have the statutory authority to make the counterclaim. With the ruling, Judge Claire Kelly denied Cyber Power's motion to dismiss the counterclaim as moot. Kelly ruled that none of the sections in the U.S. code cited by the U.S. give a basis for the counterclaim, which sought to reclassify imported cables.
Section 301 tariff exclusions
The Office of the U.S. Trade Representative has established an exclusion process for Section 301 tariffs on China. In a series of rounds since the tariffs took effect, importers have been able to request exclusions from the tariffs, as well as extensions to existing exclusions. Many exclusions have been allowed to expire, as well. Section 301 exclusions are applicable to all importers of a given good, which may be defined as an entire tariff schedule subheading or a subset of a subheading outlined in a written description.
Consumer tech products imported from China bore more than $32 billion in Section 301 tariff exposure between July 2018, when the first of the tariffs took effect, and December 2021, without dissuading most U.S. importers to abandon Chinese sourcing, according to a newly released Consumer Technology Association report produced with Trade Partnership Worldwide. A CTA spokesperson said July 20 that the association released the report to coincide with this week's public hearing at the International Trade Commission as part of its investigation on the economic impact of the Section 301 and Section 232 tariffs on U.S. industries.
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Republicans who are in the China package negotiations say that Senate Minority Leader Mitch McConnell's tweet that said that moving even a smaller Build Back Better bill would halt negotiations was not an empty threat. He had said that while Congress was away from Washington, at the beginning of the month (see 2207010039).
Five Republican senators, only one of whom voted for the U.S. Innovation and Competition Act (USICA), are asking that Senate conferees drop the directive to reopen a Section 301 exclusion process, and add a number of trade provisions only found in the House China package. Some House proposals that Sen. Mike Braun, R-Ind., Sen. Dan Sullivan, R-Ala., Sen. Kevin Cramer, R-N.D., and Florida's two senators, Rick Scott and Marco Rubio, both Republicans, want to include:
Treasury Secretary Janet Yellen, one of the most public voices for rolling back some of the Section 301 tariffs on Chinese goods to ease inflation, spoke with Chinese Vice Premier Liu He, the main trade contact, about "unfair, non-market [Chinese] economic practices," according to a readout of the July 4 call.
As senators who support subsidies to build semiconductor chips in the U.S. continue to say the trade title differences are holding up the bill, and that it should drop out, House negotiators say it's not time to give up yet.
The chairwoman of the Senate Appropriations subcommittee highlighted in her opening remarks Congress' directive to the U.S. trade representative to establish an exclusion process for Section 301 tariffs. But when Sen. Jeanne Shaheen, D-N.H., tried to ask USTR Katherine Tai about how her office is "working to comply with this directive," Tai evaded the question and talked about the deliberations in the administration on whether there should be a partial rollback of the tariffs on the vast majority of Chinese imports.
Sen. Rob Portman, R-Ohio, said that he wants to get the conference negotiations done for the China package, because the U.S. Innovation and Competition Act (USICA) has "some important trade aspects."
The Alliance for American Manufacturing told the administration that it's "absurd" to blame Section 301 tariffs for inflation, given they started years before inflation began to rise. "U.S. consumers would see little to no benefit from tariff roll backs and any erosion of tariffs will benefit China’s Communist Party and China’s manufacturing sector, which would make up the difference by increasing its prices," the group wrote. It said that all tariffs should remain. "AAM strongly supports allowing USTR to continue its fact-based exclusion process without congressional mandates or any other political interference that predetermines an outcome. While an accessible and transparent exclusion process is essential for trade enforcement actions, unwarranted tariff relief may very well signal the demise of a U.S. company that is seeking to establish a market foothold or one that has reinvented itself to fill gaps in our domestic supply chains," it wrote.