chinese imports 301 tariffs

WHAT THE ISSUE IS

Pursuant to Section 301 of the Trade Act of 1974, the President directed the Office of the United States Trade Representative (USTR) to conduct an investigation into China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. On March 22, 2018, President Trump signed a memorandum announcing that the United States would take multiple steps to protect American technology and intellectual property from certain discriminatory and burdensome trade practices by China.

OUR POSITION

The variable production line of broad parts in low volumes needed by our industry to support vehicle maintenance and repair requires a tremendously complex network of smaller sub-suppliers that does not exist in the U.S. and would be both time and cost prohibitive to replicate. As Congress and the Administration continue to develop a trade strategy with respect to China, they should ensure that American consumers and businesses are not penalized.

As USTR evaluates Section 301 tariff exclusion extensions, we request USTR to grant requests for auto parts that the industry has difficulty sourcing from other countries, for example brake rotors. Additionally, members working to re-source and re-develop supply chains have faced manufacturing challenges in other countries related to capacity issues, quality control, absence of material supply, infrastructure and logistics to product and move product.

The 25% tariff on these goods will create burdensome liquidity problems for American companies, who are already being impacted by the COVID-19 pandemic, and ultimately can only be viewed as a pass-through tax on the cost of auto repair and maintenance.

HOW THIS IMPACTS YOU

The auto care industry depends on a global supply chain including auto parts that are sourced from or manufactured from China. Tariff exclusions that are not extended will result in an increase in the cost to source or manufacture impacted parts from China.

For product-specific questions, please contact Angela Chiang at angela.chiang@autocare.org.

STATUS

The USTR has published four tariff lists since June 2018 of products imported from China that would be subject to an additional tariff. Certain products were granted exclusions from these tariffs, retroactive to the original effective date of the tariff action. Exclusions that are expiring have an opportunity to submit comments supporting or opposing an exclusion extension. Details regarding the process are published in the Federal Register notice released approximately 2 months before the exclusion expires.

Exclusions are made on a product basis and apply to all imports of the product, regardless of whether the importer filed a request. However, different products under the same HTS heading may not all be covered under the one exclusion.

On August 6th, the USTR posted a notice of certain List 3 tariff exclusions expiring on Aug. 7, 2020 that would be extended through Dec. 31, 2020. Key auto parts such as brake drums and discs, were not granted an extension.

On Dec. 13, 2019, USTR announced that the U.S. had reached a phase-one trade agreement with China in areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. The agreement also includes China's commitment to purchase U.S. goods and services.

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