On February 1, President Trump issued three executive orders (“EOs”) imposing broad tariffs on U.S. imports from Canada, Mexico, and China, initially to be effective on February 4. Invoking Presidential authority under the International Emergency Economic Powers Act (“IEEPA”), the EOs expand the national emergency declared by
Continue Reading Trump Administration Imposes Tariffs on Imports from Canada, Mexico, and China
Jay Smith
Jay Smith is a partner in the Washington office. He joined the firm after several years as a professor of political science and international affairs, during which he specialized in international trade policy and international dispute settlement. His practice in the International and Litigation groups draws on this academic and policy experience.
He is currently helping clients develop and implement strategies to mitigate supply chain risks arising from U.S. trade actions, such as product exclusions from the restrictions on imported steel and aluminum imposed under Section 232. In addition, Jay regularly represents respondents in U.S. trade remedy proceedings and related litigation, helping to secure a number of negative injury determinations at the ITC in recent years. Jay also advises clients on the negotiation and enforcement of international treaty commitments under the WTO, bilateral and regional trade agreements such as the USMCA, and other international fora—including the ongoing Indo-Pacific Economic Framework negotiations. Much of his policy work is at the intersection of trade and other areas, such as intellectual property, the environment, or labor rights.
Section 301 Tariffs and Proceedings: Recent and Potential Developments
Alert December 19, 2024
As discussed in our prior client alert, President-elect Trump’s second term is expected to bring important changes to U.S. trade policy, including with respect to U.S. tariffs. Among the tools Trump may use to modify existing U.S. tariffs is Section 301 of the Trade Act of 1974 (“Section 301”), which provided the vehicle for imposition of tariffs against China under the first Trump administration. More recently, the Biden administration has initiated new proceedings under Section 301, while also modifying existing Section 301 tariffs against China. This alert provides an overview of Section 301, explores how Section 301 has been used by recent administrations to increase tariffs on imports from China, and surveys other Section 301 actions, including currently pending investigations. This alert also examines how a second Trump administration could reactivate or modify Section 301 tariffs that were previously announced, but have been suspended or terminated.
Overview of Section 301
Section 301 is an investigative tool under U.S. trade law that allows the Office of the U.S. Trade Representative (“USTR”) to pursue unilateral trade retaliation against countries that impose unfair trade barriers against the United States. USTR may launch Section 301 investigations in response to the filing of a petition submitted by an “interested party,” or upon USTR’s own initiative. Once a Section 301 investigation is launched, the statutory deadline for completion is typically between 12 and 18 months. Under the first Trump administration, USTR often did not use the full period provided under the statute, instead completing certain investigations several months before the statutory deadline.
As part of the investigative process, USTR must request consultations with the foreign government whose conduct is at issue, and it will generally also solicit public comments and hold a hearing as part of its investigation. At the end of the investigation, USTR is authorized to impose duties or other trade restrictions where it has determined:
- that the rights of the United States under any trade agreement are being denied;
- that an act, policy, or practice of a foreign country violates, is inconsistent with, or otherwise denies the United States the benefits of any trade agreement; or
- that an act, policy, or practice of a foreign country is unjustifiable and burdens or restricts U.S. commerce.
Once imposed, Section 301 tariffs must be terminated after four years unless an extension is requested. As explained below, USTR under certain conditions can also modify existing Section 301 duties or reinstitute previously suspended or terminated Section 301 actions.Continue Reading Section 301 Tariffs and Proceedings: Recent and Potential Developments
The Impact of the U.S. Elections on Trade and International Supply Chains
October 28, 2024, Covington Alert
The upcoming U.S. presidential election on November 5 will have important implications for U.S. trade policy that are likely to affect companies reliant on international supply chains. There are important differences in how former President Donald Trump and Vice President Kamala Harris approach the use of trade tools to advance U.S. policies and priorities, including whether such tools should be deployed unilaterally, or as part of a collective action with U.S. allies.
For instance, a victory by Harris will likely signal continuity in the current approach of the Biden administration, in which trade has not been a central policy priority, but has instead taken a backseat to—and been used as a tool to support—other key policies on climate, technology, human rights, and industrial development. While a Harris administration is therefore unlikely to pursue new trade initiatives aimed at increased market access, a Harris administration may consider joint action with U.S. allies and likeminded trading partners, or at least be receptive to input from such partners in pursuing trade-related actions.
In contrast, trade is expected to take center stage under a second Trump administration, with unilateral action expected to be the preferred approach. Trump has repeatedly referred to tariffs as his policy tool of choice, and views tariffs as important in creating leverage for dealmaking with international partners on both economic and non-economic issues. Trump and his economic advisors also view the U.S. trade balance as an important measure of economic performance, and bilateral trade deficits are likely to face scrutiny and provoke potential action.
This alert explores certain key trade issues to be confronted by the next administration, assesses how each candidate may approach these issues differently, and considers how companies may prepare for and mitigate the risks associated with each candidate’s approach.
Divergent Approaches to U.S. Tariffs
While Congress has primary constitutional authority over tariffs and other trade policy matters, the President has broad authority to adjust tariffs and impose other import restrictions under certain statutes, without approval from Congress. The outcome of the U.S. election will determine to a great extent the importance that tariffs will play as a U.S. policy tool over the next four years.Continue Reading The Impact of the U.S. Elections on Trade and International Supply Chains
Threading the Needle with the Narrow U.S.-Japan Critical Minerals Agreement to Expand the Availability for EV Credits of the Inflation Reduction Act
On March 28, 2023, the United States and Japan entered into a bilateral agreement, titled the Agreement Between the Government of the United States of America and the Government of Japan on Strengthening Critical Minerals Supply Chains (“U.S.-Japan Critical Minerals Agreement” or “Agreement”).
Context and Significance of the U.S.-Japan…
Continue Reading Threading the Needle with the Narrow U.S.-Japan Critical Minerals Agreement to Expand the Availability for EV Credits of the Inflation Reduction ActMexico: Proposed Changes to Mining, Environmental, and Administrative Laws Increase Regulatory Risk, Impact Private Participation in Regulated Sectors, and Could Lead to Investment Claims
Bottom Line
Mexican President Andrés Manuel López Obrador submitted bills to Congress intended to further curtail the rights of private investors in the mining sector and beyond. As part of his resource nationalism agenda, on display in the energy sector at first, López Obrador has also nationalized lithium reserves and created a state‑owned company to lead development of those reserves. The new bills, which target other minerals and concessions in the country, have been met with shock and disappointment. If passed as drafted, and to the extent the proposed amendments are implemented to restrict vested rights arising from pre-existing mining and potentially other concessions, these bills may result in the expropriation of foreign investments and other breaches of Mexico’s obligations under applicable international investment agreements.
Legislative Process
On Tuesday March 28th, López Obrador sent to the Chamber of Deputies a bill seeking to reform the Mining Law, the National Water Law, the General Law of Ecological Equilibrium and Environmental Protection, and the General Law for Prevention and Integral Management of Waste Residues (the “Mining Bill”).
The Mining Bill will be discussed and reviewed by four Committees in the lower house – three of them presided over by López Obrador’s party, MORENA, or allied parties – giving it a relatively easy path forward. The Mining Bill requires a simple majority to be approved, and MORENA and its allied parties have the required votes to pass it. Considering that the current legislative session ends on April 30th, it is possible that the bill will move fast through the Chamber of Deputies.
In the Senate, the Mining Bill might face some opposition but probably not enough to make substantial changes as most of the commissions where it will be discussed are also presided over by MORENA or its allies.
Around the same time, López Obrador also sent to the Chamber of Deputies a bill that includes sweeping changes to administrative regulations, including rules for concessions, permits and other authorizations, which could impact the mining, infrastructure and energy sectors, among others (the “Administrative Law Bill”). While MORENA has enough votes to pass the Administrative Law Bill as well, it may face more resistance, particularly in the Senate.Continue Reading Mexico: Proposed Changes to Mining, Environmental, and Administrative Laws Increase Regulatory Risk, Impact Private Participation in Regulated Sectors, and Could Lead to Investment Claims
USTR Seeks Public Comment in Second Phase of Four-Year Review of Necessity for Section 301 Tariffs on Chinese Imports
On November 1, 2022, the Office of the U.S. Trade Representative (“USTR”) published a questionnaire for interested parties to use in commenting on the effects of the tariffs imposed on Chinese imports under Section 301 of the Trade Act of 1974 (“Section 301 Tariffs”). USTR issued the questionnaire pursuant to its October 17, 2022 notice initiating the second phase of its statutory four-year review of the Section 301 Tariffs. Questionnaire responses may address the tariffs’ impact on the whole economy, specific sectors and industries, or individual tariff headings. Responses may be submitted between November 15, 2022, and January 17, 2023. This process offers a new opportunity for companies to make a record with the Biden Administration regarding the future of the Section 301 actions, including as to specific product categories that should not be subject to duties if the tariffs remain in force.
Background
The United States imposed the Section 301 Tariffs after determining in March 2018 that China’s technology transfer and intellectual property policies and practices harmed U.S. companies. Between July 2018 and September 2019, the United States applied four tranches of tariffs on over $360 billion in Chinese imports.
The administration is defending the List 3 and List 4A tariffs against legal challenges pending before the U.S. Court of International Trade. On April 1, 2022, the court remanded those lists to USTR for further explanation or reconsideration, and USTR filed its remand determination responding to significant comments on the List 3 and List 4A tariffs on August 1, 2022. The court is now evaluating the sufficiency of that remand determination.
Under the statute, Section 301 Tariffs expire after four years unless a representative of a domestic industry that benefited from the tariffs submits a written request for continuation.[1] Accordingly, on May 3, 2022, USTR initiated its statutory four-year review of the Section 301 Tariffs in advance of their expiration beginning on July 6, 2022. (See our prior alert.) Prior to launching the statutorily mandated review, the Biden Administration’s principal action with respect to the Section 301 Tariffs was to reinstate a limited set of previously expired product exclusions. Those 352 reinstated exclusions are now set to expire on December 31, 2022.Continue Reading USTR Seeks Public Comment in Second Phase of Four-Year Review of Necessity for Section 301 Tariffs on Chinese Imports
IPEF Partners Adopt Ministerial Statement and Negotiation Objectives
On September 8 and 9, top trade officials of the United States and the other Indo-Pacific Economic Framework (“IPEF” or “Framework”) partner countries—Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand and Vietnam—launched formal negotiations in Los Angeles.
This marked the first in-person ministerial-level meeting since the IPEF launched on May 23, 2022 and follows three informal meetings since May 2022, the latest event being the virtual ministerial on July 26-27, discussed in detail in our previous post.
The Los Angeles ministerial involved intensive discussions on what to include in the scope of the Framework. Ultimately, the IPEF partners reached consensus on ministerial statements for each of the four IPEF framework pillars: Trade, Supply Chain, Clean Economy, and Fair Economy. All 14 IPEF partners have joined three of the pillars, and 13 joined the fourth—with just India opting out of the Trade pillar. While this near unanimous support for the four pillars is certainly a positive sign, the real work begins now.
This blog post summarizes how the ministerial statements characterize the four pillars and outlines next steps for the Framework and key remaining questions.
Takeaways from the Ministerial Statements
The ministerial statements confirmed the four pillars of negotiation and provided added clarity on the scope and content of each pillar. While the statements add little to the substance, they indicate a political commitment among the partners to the Framework.Continue Reading IPEF Partners Adopt Ministerial Statement and Negotiation Objectives
Biden Administration Hosts the First Indo-Pacific Economic Framework Ministerial: Updates, Outlook, and Remaining Questions
On July 26-27, 2022, the Biden Administration hosted a two-day virtual meeting with top trade officials from the 13 other partners of the Indo-Pacific Economic Framework for Prosperity (“IPEF” or “Framework”)—Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. This was the first ministerial meeting since the 13 initial participants[1] agreed on May 23, 2022 to launch “collective discussions towards future negotiations” on the Framework. The IPEF currently focuses on four “pillars”: (1) Trade; (2) Supply Chains; (3) Clean Energy, Decarbonization, and Infrastructure; and (4) Tax and Anti-Corruption. Touted as a “21st century economic arrangement designed to tackle 21st century economic challenges,” the IPEF is said to offer what Commerce Secretary Gina Raimondo calls a “innovative and flexible approach,” and is “internationally designed not to be a ‘same old, same old’ traditional free trade agreement.”
The Framework’s novel approach, however, has raised a flurry of unanswered questions. Key U.S. stakeholders, for instance, have questioned the Biden Administration’s decision not to discuss tariff reductions or market access as part of the IPEF negotiations. Concerns have been raised about the enforceability of any agreements concluded among Framework partners. Potential agreements within each pillar remain largely unknown or undisclosed, even though the Framework partners have spent months engaged in a “scoping exercise” to define the components of each pillar.
This latest ministerial meeting added little clarity. No joint statement was released at the end of the meeting, suggesting that more remains to be done before formal, text-based negotiations begin. But as negotiators approach the one-year anniversary of President Biden’s announcement of the initiative at the October 2021 East Asia Summit meeting, there is growing expectation of more concrete outcomes. The dates for the next ministerial meeting have not been formally announced, though informal reports speculate that the Framework partners may hold the next meeting in September 2022, possibly as the first in-person ministerial.
This alert outlines the scope and objectives of the IPEF’s four pillars, the progress to date and next steps, key remaining questions, and stakeholder reactions thus far.Continue Reading Biden Administration Hosts the First Indo-Pacific Economic Framework Ministerial: Updates, Outlook, and Remaining Questions
Commerce Requests Factual Information in Solar Circumvention Inquiries on Level of Investment, Non-Financial Barriers, and Research and Development Expenses
On July 14, 2022, the U.S. Department of Commerce (“Commerce”) issued a request for a range of additional factual information in connection with the agency’s ongoing circumvention inquiries into solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam that employ inputs from mainland China.[1] The deadline to respond is July 21st.
In the July 14 memorandum, Commerce seeks information about the: (1) amount of investment necessary to construct and start-up certain facilities, (2) non-financial barriers (e.g., access to inputs, qualified technical employees, technologies, research and development, etc.) that companies typically face to establish and begin certain operations, and (3) research and development (“R&D”) expenses associated with conducting certain operations. These types of facilities/operations involved in:
- refining silicon into solar-grade polysilicon,
- producing ingots from solar-grade polysilicon,
- producing wafers from solar-grade ingots,
- producing solar cells from wafers,
- producing solar modules from solar cells, and
- the same operations and products as foreign producers and exporters responding to Commerce’s solar circumvention inquiries.
Commerce Invites Comments on Proposed Rules Implementing Presidential Emergency Declaration on Solar Tariffs
On July 1, 2022, the U.S. Department of Commerce (“Commerce”) issued proposed rules implementing President Biden’s emergency declaration to provide temporary tariff relief on certain imports of solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam.[1] Commerce has provided the public with a 30-day period to comment on…
Continue Reading Commerce Invites Comments on Proposed Rules Implementing Presidential Emergency Declaration on Solar Tariffs