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USTR Issues Details on New Section 301 Tariff Increases on Chinese Goods

Client Updates

On May 28, 2024, the Office of the U.S. Trade Representative (“USTR”) published a notice in the Federal Register providing additional information on the Biden administration’s increased tariffs on Chinese goods. As reported in our previous client update, the Biden administration announced these tariff increases on May 14, 2024, pursuant to Section 301 of the Trade Act of 1974 (“Section 301”). The USTR’s notice identifies specific Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings for nearly 400 products in strategic sectors that are subject to higher tariffs and introduces an exclusion process for certain machinery used in domestic manufacturing under Chapters 84 and 85 of the HTSUS, in particular solar manufacturing equipment. Interested parties may submit comments on the proposed increases and exclusion process.

Tariff Increases

Following President Biden’s direction to increase Section 301 tariffs on strategic sectors of the economy, the USTR has proposed tariff increases for 382 HTSUS subheadings and five statistical reporting numbers of the HTSUS, covering an estimated annual trade value of $18 billion. Some items included in this proposed list are solar cells (whether or not assembled into modules), electric vehicles, parts of lead-acid storage batteries, lithium-ion batteries, semiconductors, and a variety of steel and aluminum products. The complete list of the relevant HTSUS subheadings and their new tariff rates is identified in Annex A of the Federal Register Notice.

In addition, as noted in our previous client update, President Biden directed that the new rates take effect in 2024, 2025, and 2026, depending on the item. In the notice, the USTR provides further clarification for when these increases will take effect, stating that increases in 2024 will be effective August 1, 2024, and that increases in 2025 and 2026 be effective January 1 of the corresponding year.

Exclusion Process for Machinery and Solar Manufacturing Equipment

The USTR is also establishing an exclusion process in which interested parties may request that particular machinery used in domestic manufacturing, as classified within specific subheadings under Chapters 84 and 85 of HTSUS, be temporarily excluded from Section 301 tariffs through May 31, 2025. The HTSUS subheadings eligible for exclusion are provided in Annex B of the notice, which includes machinery for liquefying air or gas, offshore oil or natural gas drilling and production platforms, and an assortment of drilling or grinding machines. The USTR will issue an additional notice outlining the procedures for requesting exclusions at a later date.

Additionally, in an effort to “support domestic [solar] production and decrease reliance on China in [the energy] sector,” the USTR set forth 19 proposed temporary exclusions specifically for solar manufacturing equipment, including silicon growth furnaces, machines designed for handling in the assembly of solar modules, and certain bank saws and diamond wire saws designed for use in solar wafer manufacturing. The proposed exclusions can be found in Annex C of the notice and will last through May 31, 2025.

Request for Public Comments

Interested parties may submit comments on the proposed modifications and exclusion processes using the designated docket on the USTR comments portal. The USTR is accepting comments until June 28, 2024.

Extension of Certain Existing Exclusions

On May 30, 2024, the USTR published an additional notice that provides an extension of 429 product-specific tariff exclusions for Chinese goods, which were otherwise set to expire on May 31, 2024. Out of these, 164 exclusions for products identified in Annex C of the notice—including certain motors, electric motors, and gas engines—were extended until May 31, 2025. The remaining exclusions were only extended until June 14, 2024, to allow for a short transition period.

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