What is Section 301 and why was it used against China?
Section 301 of the Trade Act of 1974 authorizes the U.S. Trade Representative (USTR) to investigate and respond to unfair foreign trade practices, including intellectual property theft, forced technology transfer, and discriminatory trade barriers. Following a year-long investigation completed in March 2018, USTR found that China's trade practices were unreasonable and imposed tariffs in stages.
The investigation documented systemic issues including forced joint ventures requiring U.S. companies to share technology, state-sponsored cyber-theft of trade secrets, and discriminatory licensing restrictions. These findings provided the legal basis for imposing additional duties under Section 301.
Unlike IEEPA tariffs, Section 301 actions require a formal investigation and public comment period. The tariffs were implemented in four tranches (Lists 1 through 4) between July 2018 and September 2019, each covering different product categories at varying rates.
What are the Section 301 tariff lists and rates?
List 1 covers approximately $34 billion in Chinese goods at a 25% additional duty rate. Products include industrial machinery, electronic components, and medical devices. List 2 adds another $16 billion at 25%, targeting semiconductors, plastics, and chemicals.
List 3 is the largest tranche, covering roughly $200 billion in goods at 25%. This list includes furniture (HTS 9403.60), power supplies (HTS 8504.40), and laptop computers (HTS 8471.30.01). List 4 was split into 4A and 4B. List 4A covers approximately $120 billion at 7.5%, including apparel such as cotton t-shirts (HTS 6109.10.00) and digital cameras (HTS 8525.80).
List 4B was proposed but never implemented, meaning some consumer goods like smartphones, toys, and certain footwear avoided Section 301 tariffs. Importers must check their specific HTS code against the published lists to determine which rate applies.
How do Section 301 tariffs interact with MFN and IEEPA rates?
Section 301 tariffs are charged in addition to the standard MFN duty rate and the IEEPA 10% global tariff. All three layers stack. For cotton t-shirts (HTS 6109.10.00) from China, the total is: 16.7% MFN + 7.5% Section 301 (List 4A) + 10% IEEPA = 34.2%.
For products on Lists 1 through 3, the math is even more significant. Wooden furniture (HTS 9403.60) from China faces: MFN Free + 25% Section 301 + 10% IEEPA = 35.0% total duty. These rates make China-origin goods substantially more expensive than equivalent products from countries not subject to Section 301.
Exclusion processes have been available for specific products where tariffs cause severe economic harm and no alternative supply exists. However, most exclusions granted during 2020-2021 have since expired.