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Could China Tariff Action Signal Broader Relief?

Following public notice and comment, the U.S. Trade Representative (USTR) has decided to reinstate certain extended product exclusions on tariffs imposed in the China Section 301 Investigation through Dec. 31, and the apparel industry hopes there’s more to come.

USTR said the determination reinstates 352 of the 549 eligible exclusions, including some textiles and backpacks and duffel bags, and a few apparel items and home goods, such as certain bathrobes and blankets. The textiles include certain silk and polyester fabrics, and cashmere and camel hair yarns. The reinstated product exclusions, published in the Federal Registry, are retroactive to Oct. 12, 2021.

“We are pleased that USTR has finished their review of the outstanding product exclusions from the China 301 tariffs,” Julia Hughes, president of the United States Fashion Industry Association. “This is an important first step to remove the burden on American consumers. We hope that soon, perhaps as early as this week’s Congressional hearings for U.S. Trade Representative [Katherine] Tai, USTR will also take action to announce a new product exclusion process for all the products covered by the China 301 tariffs.”

Hughes said there is bipartisan Congressional support for this action, noting that last month 41 Senators wrote to USTR in support.

“From our perspective, such a process is especially important for consumer products and could be a first step to cut inflationary pressures on American families,” Hughes added.

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In prior rulings, USTR modified the action in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation by excluding certain products from additional duties. USR said these new determinations were made after careful consideration of the public comments, and in consultation with other U.S. agencies.

In October, when the initial exclusions were announced, Tai said the process was a key part of the Biden-Harris administration’s deliberative, long-term vision for realigning the U.S.-China trade relationship around the nation’s priorities and making trade work for American workers and businesses.

In her speech outlining the new approach, Tai also announced that she will discuss with China its performance under the Phase One Agreement, raise broader concerns with Beijing’s non-market policies and practices, and work with allies and partners who share America’s strong interest in ensuring that the terms of competition are fair.

The American Apparel & Footwear Association (AAFA) has long called for the removal of Section 301 tariffs in apparel and footwear.

“AAFA continues to call on the Biden administration to pursue swift and effective policies to immediately alleviate the increasingly overwhelming costs on companies,” Steve Lamar, president and CEO of the AAFA, said last month. “Number one, we need to see immediate elimination and refund of punitive Section 301 tariffs on U.S. imports from China.”

The reinstatement of the tariff exclusions included factors such as whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries; any changes in the global supply chain since September 2018 with respect to the particular product or any other relevant industry developments; any efforts importers or U.S. purchasers have undertaken since September 2018 to source the product from the United States or third countries, and domestic capacity for producing the product in the United States.

In addition, USTR considered whether or not reinstating the exclusion would impact or result in severe economic harm to a U.S. company or interests, including the impact on small businesses, employment, manufacturing output and critical supply chains in the United States, as well as the overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies and practices covered in the Section 301 investigation.

USTR’s determination was also made with the advice of advisory committees, the interagency Section 301 Committee and the White House Covid–19 Response Team.