Recent Trade & Tariff Perspectives

August 10, 2022  |  Kevin Koch  Senior Manager Product Development

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The CHIPS Act and What Lies Ahead for Trade Policy and Tariffs in the United States

Listen to this week's Trade & Tariff Perspective:


The CHIPS and Science Act: What’s in it?

Did you know that currently only 12% of chips are manufactured domestically, compared to 37% in 1990? The United States government is well aware that many foreign competitors are investing heavily to dominate this industry. In response, the Biden Administration just signed into law “Creating Helpful Incentives to Produce Semiconductors in America Act,” which provides for more than $50 billion in subsidies for U.S. semiconductor production and research, and will boost efforts to make the United States more competitive with respect to science and technology efforts. Read a section-by-section summary of key provisions.

What’s not in the CHIPS? Trade provisions

If you’re wondering what happened with the trade provisions under the Senate’s U.S. Innovation and Competition Act and the House’s America Competes Act, it seems they were left out of this bill to keep the focus on supporting the semiconductor industry and to boost science and technology efforts at home.

The trade title of those bills included quite a few items relevant to global trade and tariffs, including but not limited to, reinstatement and renewal of the Generalized System of Preferences (GSP), renewal of the Miscellaneous Tariff Bill (MTB), extensions to some Section 301 China duty exclusions, calls for a new process to review duty exclusions for goods subject to the China duties, and changes to de minimis shipments (where value entered into the commerce is under $800). We’ll have to wait and see what happens across legal, executive, and congressional efforts regarding these trade items. 

Where do we stand on the Section 301 China Tariffs?

Legal front: Recent United States Trade Representative (USTR) actions at the Court of International Trade

The previous administration-imposed tariffs in 2018 and 2019 on Chinese goods across four tranches:

  • List 1: With cargo value of $34 billion
  • List 2: $16 billion
  • List 3: $200 billion
  • List 4a: Covering $120 billion
Graph depicting decoding of the US China trade war 

Since then, thousands of importers have challenged these tariffs in the Court of International Trade (CIT), claiming the administration could not change its initial decision to impose tariffs on $50 billion worth of Chinese goods—the first two lists—without a new Section 301 investigation.

In April 2022, the CIT found that the administration acted within its authority under Section 301 of the Trade Act of 1974, but it also found that the USTR failed to appropriately respond to stakeholder comments on changes made to the lists after they were proposed. The CIT demanded that the USTR reconsider the tariffs or further explain its “rationale for imposing the tariffs and, as necessary, the USTR’s reasons for placing products on the lists or removing products therefrom.”

This takes us to August 1, where the USTR recently submitted a 90-page filing explaining its rationale for the actions taken. Essentially, some products were removed because of their sparse availability outside of China and because the USTR did not believe tariffs on those products would compel China to change its behavior. Moreover, according to the report, many of the comments from the public to amend or exclude the tariffs did not rise “to the level of comments the Trade Representative determined to act on by removing products,” it said.

Both sides are expected to file a joint status report with a proposed procedural schedule for the “further disposition of this litigation” by August 15.

The USTR front: Statutory review of Section 301 tariffs underway

The agency is still undergoing a mandatory four-year review of all the Section 301 China tariffs, as required under the trade statute used to impose them. It could take several more months before any decisions are made. The agency plans to summarize all of the comments it has received into a Federal Register where it will provide next steps in the process to review the tariffs.

In addition, earlier this spring the USTR did make a move to extend some, but not all, previously granted exclusions from the China duties for shipments cleared through U.S. Customs and Border Protection between October of last year and the end of this current calendar year.

It is possible that the USTR could conduct another review to extend the duties or reconsider the exclusions and/or process to exempt some products from the China duties.

Executive front: Still no decisions announced regarding the direction of the Section 301 China Tariffs

In early July, there was speculation that the Biden administration could soon make a decision regarding whether the China tariffs get lifted and to what degree they change. Through some interviews the Biden administration made, it appeared the Administration was being thoughtful about a possible decision and was expected to make one shortly regarding the way forward on tariffs. However, it’s been quiet since that initially flurry of activity.

What should shippers be on the lookout for regarding trade policy?

With the recent passage of the CHIPS and Science Act, it seems very unlikely at this point that the trade and tariff provisions from the previous bills will carry on. Those proposals will need to find new legislative vehicles to attach to in order to reach enactment and/or renewal. Again, those topics include, but are not limited to:

  • Renewal of the Generalized System of Preferences benefits program—a trade preference program that allows companies to import certain products duty-free from beneficiary countries, it expired at the end of 2020
  • Renewal of the Miscellaneous Tariff Bill—a program that provides important duty savings benefits, temporarily, on goods imported to the United States, this also expired at the end of 2020
  • Changes to trade remedy law and provisions for Section 301 China duty exclusions
  • Changes to de minimis shipment benefit eligibility
  • Directing the administration to restart a Section 301 exclusion process

C.H. Robinson will continue to monitor these various executive and legislative events to keep you apprised of trade policy and customs enforcement trends—and to help you understand the implications for your business. Reach out to our customs experts if you have any questions. Subscribe to our Client Advisories and Trade and Tariff Insights to be notified when changes take place. Connect with one of our trade policy experts to learn more.

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Our information is compiled from a number of sources that to the best of our knowledge are accurate and correct. It is always the intent of our company to present accurate information. C.H. Robinson accepts no liability or responsibility for the information published herein.

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