
As more tariffs are considered, this video explains the potential impact.
In this video from The Franklin Partnership, contributing author Omar Nashashibi unpacks the potential impact related to proposed tariffs on China related to shipbuilding, steel and aluminum.
Possible 301 Action on Shipbuilding, Steel and Aluminum from China
On April 17, President Biden and his administration announced two actions that could lead to additional tariffs on imports from China.
In a speech to steelworkers in Pittsburgh, the President called on the U.S. Trade Representative (USTR) to consider tripling the tariffs on imported steel and aluminum from China. Also on April 17th, the same Office of USTR announced it will initiate an investigation under Section 301 of the Trade Act of 1974 into actions by China distorting markets for commercial vessels, maritime shipping, and logistics that are causing harm to U.S. shipbuilders and other workers.
On March 12, 2024, five labor unions filed a petition under Section 301 with the USTR alleging China’s actions are increasing their excess shipbuilding capacity, depressing prices, placing restrictions and burdens on inputs, while providing unfair advantages Chinese companies. Among the allegations included in the petition, the Chinese government is using industrial policies to increase their market share while also directing mergers and providing financing and non-market advantages to Chinese firms, and tolerating intellectual property theft. These actions alleged in the 301 petition, along with the control of shipping freight rates, capacity, allocations, and creating a network of upstream suppliers is harming U.S. workers and companies.
The investigation could result in tariffs on imported goods and services to the U.S. from China later this year and possibly as soon as this summer. Any tariffs imposed by the Biden administration would be in addition to existing duties and tariffs already in place.
The next steps for the 301 shipbuilding investigation following the April 17th initiation come on May 22nd when comments are due to USTR and the request to appear at the May 29th public hearing at the U.S. ITC here in Washington, D.C. also due on May 22nd.
On the steel and aluminum announcement, President Biden directed USTR to consider tripling the tariff rate on those imported metals from China. He is doing so not under the Section 232 national security tariffs, which already impose a 25 percent tariff on steel and 10 percent on aluminum from around the world.
The latest action is being taken as part of the existing Section 301 tariff investigation. The USTR is required by law to conduct a review after four years of the tariffs on China imposed by former President Trump of 25 percent on Lists 1, 2, and 3, and 7.5 percent on List 4a. USTR initiated that review nearly two years ago and has yet to release its results, saying recently that it would do so “soon”.
With the review still underway, USTR will use this process as the opportunity to increase the tariffs on imported steel and aluminum from China under Section 301. This would accomplish two key points, expedite the method by which the Biden administration can impose these tariffs on imported Chinese steel and aluminum using an existing ongoing process, and pushing USTR to complete its long-awaited review of the 301 that could result in increasing tariffs on other imports.
Increased tariffs rates imposed under Section 301 on imported steel and aluminum from China are placed on those products in addition to existing Section 232 tariffs of 25 and 10 percent, respectively, and the more than 200 antidumping and countervailing duty cases currently in effect. The White House fact sheet indicates that the Biden Administration has already imposed 30 antidumping and countervailing duties on steel-related products.
Both the actions on steel and aluminum and on shipbuilding are likely the beginning of a new round of tariffs expected on China in the coming months. For companies not involved in those markets, the April 17 announcements are important as they signal that the Biden administration is preparing for further action on Chinese imports.
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