Updated June 15, 2021
Section 301: Tariff Exclusions on U.S. Imports from China
In 2018, the U.S. Trade Representative (USTR) determined,
With the COVID-19 pandemic, the agency prioritized the
pursuant to an investigation under “Section 301” (Title III
review of exclusion requests concerning medical products,
of the Trade Act of 1974, 19 U.S.C. §§2411-2420), that
resulting in new exclusions and extensions for some
China’s acts, policies, and practices related to technology
personal protective equipment (PPE) in short supply.
transfer, intellectual property (IP), and innovation were
Separately, the USTR also requested public comments on
unreasonable or discriminatory and burdened or restricted
whether to remove additional products covered by any list
U.S. commerce. To counter them and obtain their
that were relevant to the U.S. response to the COVID-19
elimination, the Trump Administration imposed, under
pandemic. As a result, it granted new exclusions and
Section 301, four rounds of increased tariffs on about two-
extensions for certain medical-care products.
thirds of U.S. imports from China. However, to avoid harm
Figure 1. Section 301 Exclusions
to U.S. interests, the USTR instituted “tariff exclusions” for
certain U.S. imports that would otherwise be subject to
tariffs. This is the first time that the agency has established
an exclusion request process, and several Members of
Congress have raised concerns about its implementation.
Some Members have questioned USTR’s ability to “pick
winners and losers” through granting or denying requests or
have pushed for broad tariff relief amid concerns about the
negative impact of tariffs on the U.S. economy. Others, not
wanting to undermine the use of Section 301 to address
China’s unfair trade practices, have discouraged the USTR
from granting tariff exclusions at all. The agency
established an exclusion process for each of the four stages
of tariff increases under Section 301—all of which have

now closed. The USTR’s latest actions in response to the
Source: CRS with information from the Office of the USTR.
Coronavirus Disease 2019 (COVID-19) pandemic suggest
Note: Figures may not reflect amendments to product-specific exclusions and
that any new exclusions or extensions might be limited in
do not include requests submitted on or after March 25, 2020, in response to
85 FR 16987. However, exclusions granted to date and noted here may have
scope to medical supplies related to the pandemic, and not
been informed by those requests.
be aimed at providing broader tariff relief.
Background
Section 301 Tariff Exclusion Process
The tariff exclusion process enabled interested parties—
In August 2017, long-standing concerns over China’s
including law firms and trade associations—to petition for
policies on IP, subsidies, technology, and innovation led the
an exemption from the Section 301 tariff increases for
USTR to launch an investigation—under Section 301—into
specific imports classified within a 10-digit Harmonized
those policies and their impact on U.S. stakeholders. The
Tariff Schedule of the United States (HTSUS) subheading.
investigation concluded that four broad policies or practices
The time window to submit requests is closed, but the
justified U.S. action: (1) China’s forced technology transfer
USTR is reportedly reviewing all actions related to the
requirements, (2) cyber-enabled theft of U.S. IP and trade
investigation, including decisions on whether and how to
secrets, (3) discriminatory and non-market-based licensing
accept new exclusion (and extension) requests. While the
practices, and (4) state-funded strategic acquisition of U.S.
USTR approved, on average, 35% of new requests under
assets. Subsequently, as part of its efforts to pressure China
the first two actions, the approval rates under the third and
to change these practices, the United States imposed
fourth actions were 5% and 7%, respectively.
additional tariffs, of up to 25%, on certain U.S. imports
from China under four separate actions (per Lists 1-4).
According to the USTR, all requests were evaluated on a
case-by-case basis. The agency indicated that, in
During the Section 301 notice, hearing, and comment
determining which requests to grant, it considered the
period on proposed tariff increases, the USTR heard
following: (1) availability of the product in question from
numerous U.S. stakeholders who expressed concerns about
non-Chinese sources, (2) attempts by the importer to source
how additional tariffs could affect their businesses, as well
the product from the United States or third countries, (3) the
as U.S. consumers. In response, for each Section 301 action
extent to which the imposition of Section 301 tariffs on the
regarding a new list of covered products, the USTR created
particular product will cause severe economic harm to the
a process whereby interested parties could request that a
importer or other U.S. interests, and (4) the strategic
particular product be excluded from the tariffs, subject to
importance of the product to “Made in China 2025” or other
certain criteria. Title III of the Trade Act of 1974 does not
Chinese industrial programs. Past exclusions were also
outline a formal process for exclusions or require the USTR
granted for reasons that are thought to include, among
to establish one. The determination to do so appears to be
solely at the USTR’s discretion.
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Section 301: Tariff Exclusions on U.S. Imports from China
others, U.S. national security interests and demonstrable
requested comments on whether to remove Section 301
economic hardship from the tariffs for small businesses.
duties on “medical-care products” related to the COVID-19
There was no timetable for providing responses to filed
response. Accordingly, the USTR opened a new comment
requests, but the agency periodically announced decisions
period, which closed on June 25, 2020. Comments could be
on pending requests through Federal Register notices. The
submitted regarding any medical product subject to Section
“index” on the “USTR Exclusion Portal” also indicated the
301 tariffs, whether or not it was subject to a pending or
status of each request in the review process. When the
denied exclusion request. The notice asked that comments
“explain precisely how
USTR issued an exclusion, it was generally valid for one
the product relates to the response
year after the exclusion notice was published in the Federal
to the COVID-19 outbreak,” but it provided no further
Register and retroactive to the imposition of the tariffs
guidance on the types of products that the USTR considered
to be “medical
(with the starting date varying by applicable list).
-care products.” The review of comments
Exclusions are not specific to the requestor, so any party
was to run parallel to, and was not to affect, any ongoing
importing a product covered by an exclusion may do so
product exclusion requests that were still under review.
under the exclusion and request retroactive tariff refunds
In response to these comments and the advice from
from U.S. Customs and Border Protection (CBP).
advisory committees, on December 22, 2020, the USTR
Through January 31, 2020, the USTR received a total of
determined to extend 80 product exclusions on medical-
52,746 exclusion requests, pertinent to all four actions. Of
care products that were set to expire on December 31, 2020
these, 6,804 (13%) were granted and 45,942 (87%) were
(until March 31, 2021) and to grant new tariff exclusions on
denied (Figure 1). Specifically, the exclusions are reflected
additional medical-care products. These new exclusions
in 99 10-digit HTSUS tariff subheadings and 2,129
(originally effective from January 1 through March 31,
specially prepared product descriptions—all of which cover
2021) were reflected in 10 10-digit HTSUS tariff
6,804 separate requests. Because most exclusions apply to
subheadings and 9 specially prepared product descriptions,
specific products within a relevant subheading—not to
including clinical thermometers, disinfectants, surgical
entire subheadings, CRS could not determine the exact
gowns, and face shields. On March 5, 2021, the USTR
amount of trade covered by the exclusions. The USTR also
extended—through September 30, 2021—the 99 product
issued extensions to certain exclusions. They apply to 52
exclusions included in the December 2020 announcement.
(of the 99) HTSUS subheadings and 516 (of the 2,129)
Issues for Congress
specially prepared product descriptions. These extensions
In recent years, some Members have introduced legislation
have expired or are set to expire in September 2021. (These
to amend Title III of the Trade Act of 1974, while also
figures reflect the new exclusions and extensions granted in
raising the issue of establishing or streamlining an
December 2020 and discussed below.)
exclusion process during hearings and in letters to the
COVID-19 and Medical-Care Products
USTR. Some of the legislative proposals have included
The USTR announced in March 2020 that, prior to the
measures to require greater congressional consultation or
COVID-19 outbreak, the agency had been working with the
approval before trade restrictions are imposed, modified, or
U.S. Department of Health and Human Services “to ensure
waived pursuant to Section 301 or to establish a formal
that critical medicines and other essential medical products
product exclusion process (e.g., the American Business
were not subject to additional Section 301 tariffs.”
Tariff Relief Act of 2019 and the Import Tax Relief Act of
Consequently, the United States had not imposed tariffs on
2019). More recently, on June 8, 2021, the Senate passed
certain critical products, such as ventilators, oxygen masks,
the United States Innovation and Competition Act of 2021
and nebulizers. At the time, the USTR indicated that it had
(S. 1260), which, if enacted, would suspend tariffs—
been prioritizing the review of requests for exclusions on
including those imposed under Section 301—on certain
medical care products, resulting in exclusions granted on
goods needed to combat the COVID-19 pandemic and
basic medical supplies (e.g., gloves and hospital gowns).
would formalize the general process for excluding imports
from Section 301 tariffs.
In March 2020, the USTR began to exempt certain medical
products from Section 301 tariffs in several rounds of
As the Biden Administration reviews the Section 301
exclusions. CRS could not determine exactly how many of
actions against China and possibly makes use of Section
them were exempted on the basis of COVID-19 concerns,
301 authorities in a number of ongoing investigations
as the USTR does not specify the rationale for granting
initiated under the Trump Administration (e.g., against
exclusions in its announcements. While some products can
Vietnam), Congress could also engage with the
be easily identified, there are others with known or potential
Administration to develop and implement specific
medical uses—or inputs for the manufacture thereof—that
guidelines for when and how to grant and extend
received exclusions but whose ultimate purpose cannot
exclusions. This could potentially promote transparency,
always be ascertained from HTSUS subheadings or the
consistency, and proper application of standards in
provided product descriptions (e.g., organic chemicals or
reviewing exclusion requests, thereby helping to ensure that
textiles for the manufacture of pharmaceuticals or PPE).
the USTR carries out Section 301 objectives as prescribed
Recent New Exclusions and Extensions
by Congress.
On March 25, 2020, the USTR published a Federal
Register notice seeking comments to determine if further
Andres B. Schwarzenberg, Analyst in International Trade
modifications to the Section 301 tariffs on U.S. imports of
and Finance
from China were necessary to respond to the COVID-19
IF11582
pandemic in the United States. Specifically, the agency
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Section 301: Tariff Exclusions on U.S. Imports from China


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https://crsreports.congress.gov | IF11582 · VERSION 10 · UPDATED

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