Updated December 31, 2018
Safeguards: Section 201 of the Trade Act of 1974
On January 23, 2018, President Trump proclaimed a four-
Factors the ITC must consider when determining injury
year safeguard measure on imports of certain crystalline
include (1) the significant idling of production facilities; (2)
silicon photovoltaic cells (solar cells) and modules, and a
the inability of a significant number of firms to carry out
three-year safeguard on large residential washing machines.
domestic production at a reasonable level of profit; and (3)
These safeguards, issued under Section 201 of the Trade
significant unemployment or underemployment within the
Act of 1974 (19 U.S.C. §2251), imposed additional tariffs
U.S. industry. The ITC also considers import trends and
and quotas on U.S. imports of these products. The
other factors, as well as declines in production, profits,
safeguards were instituted based on findings by the U.S.
wages, productivity, and employment. The ITC makes its
International Trade Commission (ITC) that these goods are
injury determination based on a vote of the Commissioners.
being imported into the United States in such increased
If the Commission is equally divided, the President may
quantities that they are a substantial cause of serious injury
select either option.
to U.S. manufacturers. The ITC also recommended possible
steps to remedy the injury.
Figure 1. Section 201 Timeline
What Is Section 201?
Section 201 or “safeguard” actions are designed to provide
temporary relief for a U.S. industry (for example, additional
tariffs or quotas on imports) in order to facilitate positive
adjustment of the industry to import competition. “Positive
adjustment” in the law means the ability of the industry to
compete successfully with imports after termination of the
safeguard measure, or the industry’s orderly transfer of
resources to other productive pursuits; and the ability of
dislocated workers to transition productively. Section 201
actions are deemed consistent with U.S. international
obligations provided that they conform to the World Trade
Organization (WTO) Agreement on Safeguards.
Section 201 Process
Section 201 investigations are generally initiated by a
Source: Chart by CRS.
written petition filed by a trade association, firm, union, or
Note: Timeline is extended if ITC determines case is complicated,
group of workers representing a U.S. industry. Petitioners
critical circumstances are al eged, or merchandise is perishable.
must also include (with the petition or within 120 days) a
Remedy Recommendations
plan to facilitate the industry’s positive adjustment to
If the ITC makes an affirmative injury determination, it
import competition. Investigations may also be triggered by
considers actions that would address the serious injury and
House Ways and Means or Senate Finance Committee
would be most effective in facilitating the industry’s
resolutions, at the request of the U.S. Trade Representative
positive adjustment to import competition. It may
(USTR), or at the ITC’s own initiative.
recommend: (1) an increase in, or imposition of, a duty on
Injury Investigation
the imports; (2) a tariff-rate quota on the product; (3) a
The ITC’s investigative process occurs in two phases. In
modification, or imposition of, any quantitative restriction
each phase, the ITC must hold hearings, solicit public
on imports; or (4) any combination of these actions. In
comments, and publish all findings in the Federal Register.
addition to these remedies, the ITC may also recommend
that the President initiate international negotiations or
In the first phase, the focus is on the affected U.S. industry
otherwise alleviate the injury or threat, or implement any
and whether it is being seriously injured or threatened with
other action authorized under law to facilitate positive
serious injury; and, if so, whether an increase in imports are
import competition. Only those Commission members who
a “substantial cause” thereof. This phase must be completed
concurred in the affirmative injury determination may vote
within 120 days after the filing of the petition, unless the
on the recommended remedy, although other
ITC determines that the investigation is “extraordinarily
Commissioners may submit separate views.
complicated.” In this case, it may take up to 30 additional
ITC Report to the President
days to make an injury determination. The timeline may be
further extended if the petitioner has alleged “critical
Unless an extension is granted, the ITC must report its
circumstances” or the product is perishable; because
findings to the President within 180 days of the petition
temporary relief may be provided in these cases.
filing. After submission, the ITC must also release its
findings (business confidential information redacted) in the
Federal Register.
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Safeguards: Section 201 of the Trade Act of 1974
Presidential Action
After the President receives the ITC review and consults
After receiving the ITC’s report, the President has 60 days
with the Secretaries of Commerce and Labor, he may
to decide which, if any, of the ITC’s recommendations to
modify, reduce, or terminate the action if he determines that
implement. The deadline may be extended another 15 days
the industry has not made adequate efforts toward positive
if the President requests additional information from the
adjustment or if the action is no longer effective due to
ITC. The President may opt to implement the ITC’s
economic circumstances. The President may also terminate
recommendations, modify them, or do nothing. When
or change the remedy if the industry petitions him to do so
making a determination under Section 201, the President
on the basis of positive adjustment to import competition.
must consider the:
Section 201 Actions
recommendations and report of the ITC;
The ITC conducted 75 Section 201 investigations between
degree to which workers and firms are already
1975 and 2018. There were no new Section 201
benefiting from adjustment assistance and worker
investigations initiated between 2001 and the cases initiated
retraining programs;
in the Trump Administration. In these investigations, the
industry’s efforts (including proposals outlined in the
ITC determined in the negative in 33 cases (including 3 tie
adjustment plan) to make a positive adjustment to
votes for which the President accepted the ITC’s negative
import competition;
determination, meaning that the investigation ended). The
probable effectiveness of the ITC’s proposed actions to
President did not grant relief in 14 cases. The 28 times in
facilitate the industry’s positive adjustment;
which the President granted relief, it was in the form of
short- and long-term economic and social costs of the
tariff increases (9), adjustment assistance (6), tariff-rate or
actions as opposed to the potential benefits; and
import quotas (3), marketing agreements (1), combinations
position of the domestic industry in the U.S. economy.
of these actions (6); and in 3 instances, more open-ended
types of relief (voluntary restraint agreement, income
The President must also weigh U.S. national economic and
security interests, including the proposed remedy’s possible
supports, retraining/relocation of workers).
impact on U.S. consumers and on other U.S. industries. If
Figure 2. Section 201 Outcomes, 1975-2018
the President decides to impose a remedy, he has several
options. He may:
proclaim a tariff, tariff increase, tariff-rate quota, or
quota on imports;
implement adjustment measures for U.S. firms and
workers;
negotiate and implement agreements limiting exports
with other countries;
proclaim procedures for the auction of import licenses;
initiate international negotiations;
submit legislative proposals to Congress;
take any other actions under the President’s legal
authority; or
Source: CRS Chart based on GAO and Federal Register documents.
use any combination of these actions.
Solar Exclusions
Congressional Role
In the President’s determination on solar cells and modules,
he directed the USTR to establish procedures for excluding
On the day the President takes action (or decides to take no
particular products from the safeguard measure based on
action) under Section 201, he is required to report to
requests from the public. Based on procedures announced
Congress in writing, describing the action and the reasons
for it. If the President’s action differs from the
on February 14, 2018, in September 2018 the USTR
ITC’s
excluded several products from the safeguard measure,
recommendation, or if the President opts to take no action,
including off-grid panels of 45 watts or less; and flexible
Congress may enact a joint resolution of disapproval within
90 days of receiving the President’s report. If a resolution is
and semi-flexible panels generally used on boats and RVs.
enacted, the ITC’s recommendation becomes the remedy,
WTO Challenges
and the President must proclaim it within 30 days.
On May 14, 2018, South Korea requested WTO
Duration and Review
consultations with the United States regarding both of the
The President may grant import relief for an initial period
U.S.-implemented safeguards on washing machines
of up to four years and extend it one or more times, up to a
(DS546) and solar products (DS545), and on August 16,
maximum of eight years. The ITC must monitor Section
formally requested that WTO dispute settlement panels be
201 actions as long as they are in effect, especially with
established. On August 14, 2018, China requested
respect to the efforts and progress of the domestic industry
consultations with the United States on the safeguard on
and workers to adjust positively to import competition. If
solar products (DS562).
the initial period of the action exceeds three years, the ITC
is also required to submit a midterm review to the President
Vivian C. Jones, Specialist in International Trade and
and Congress.
Finance
IF10786
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Safeguards: Section 201 of the Trade Act of 1974
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