Updated September 9, 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 began to
pursuant to an investigation under “Section 301” (Title III
prioritize the review of exclusion requests concerning
of the Trade Act of 1974, 19 U.S.C. §§2411-2420), that
medical products in short supply. Separately, the USTR
China’s acts, policies, and practices related to technology
also requested public comments on whether to remove
transfer, intellectual property (IP), and innovation were
additional products covered by any list that were relevant to
unreasonable or discriminatory and burdened or restricted
the U.S. response to the pandemic. As a result, it granted
U.S. commerce. To counter them and obtain their
new exclusions for certain medical-care products, such as
elimination, the Trump Administration imposed, under
personal protective equipment (PPE).
Section 301, four rounds of increased tariffs on about two-
Figure 1. Section 301 Exclusions
thirds of U.S. imports from China. However, to avoid harm
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
Source: CRS with information from the Office of the USTR.
recent actions have been limited
Note: Figures may not reflect amendments to product-specific exclusions and
in scope to medical supplies related to the Coronavirus
do not include requests submitted on or after March 25, 2020, in response to
Disease 2019 (COVID-19) pandemic, and not aimed at
85 FR 16987. However, exclusions granted through December 2020 and noted
providing broader tariff relief.
here may have been informed by those requests.
Background
Section 301 Tariff Exclusion Process
In August 2017, long-standing concerns over China’s
The tariff exclusion process enabled interested parties—
policies on IP, subsidies, technology, and innovation led the
including law firms and trade associations—to petition for
USTR to launch an investigation—under Section 301—into
an exemption from the Section 301 tariff increases for
those policies and their impact on U.S. stakeholders. The
specific imports classified within a 10-digit Harmonized
investigation concluded that four broad policies or practices
Tariff Schedule of the United States (HTSUS) subheading.
justified U.S. action: (1) China’s forced technology transfer
The time window to submit requests is closed, but the
requirements, (2) cyber-enabled theft of U.S. IP and trade
USTR is reportedly reviewing all actions related to the
secrets, (3) discriminatory and non-market-based licensing
investigation, including decisions on whether and how to
practices, and (4) state-funded strategic acquisition of U.S.
accept new exclusion requests. While the USTR approved,
assets. Subsequently, as part of its efforts to pressure China
on average, 35% of new requests under the first two
to change these practices, the United States imposed
actions, the approval rates under the third and fourth actions
additional tariffs, of up to 25%, on certain U.S. imports
were 5% and 7%, respectively.
from China under four separate actions (per Lists 1-4).
According to the USTR, all requests were evaluated on a
During the Section 301 notice, hearing, and comment
case-by-case basis. The agency indicated that, in
period on proposed tariff increases, the USTR heard
determining which requests to grant, it considered the
numerous U.S. stakeholders who expressed concerns about
following: (1) availability of the product in question from
how additional tariffs could affect their businesses, as well
non-Chinese sources, (2) attempts by the importer to source
as U.S. consumers. In response, for each Section 301 action
the product from the United States or third countries, (3) the
regarding a new list of covered products, the USTR created
extent to which the imposition of Section 301 tariffs on the
a process whereby interested parties could request that a
particular product will cause severe economic harm to the
particular product be excluded from the tariffs, subject to
importer or other U.S. interests, and (4) the strategic
certain criteria. Title III of the Trade Act of 1974 does not
importance of the product to “Made in China 2025” or other
outline a formal process for exclusions or require the USTR
Chinese industrial programs. Past exclusions were also
to establish one. The determination to do so appears to be
granted for reasons that are thought to include, among
solely at the USTR’s discretion.
others, U.S. national security interests and demonstrable
economic hardship from the tariffs for small businesses.
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Section 301: Tariff Exclusions on U.S. Imports from China
There was no timetable for providing responses to filed
tariffs, whether or not it was subject to a pending or denied
requests, but the agency periodically announced decisions
exclusion request.
on pending requests through Federal Register notices. The
In response to these comments and the advice from
“index” on the “USTR Exclusion Portal” also indicated the
advisory committees, in December 2020, the USTR
status of each request in the review process. When the
determined to extend 80 product exclusions on medical-
USTR issued an exclusion, it was generally valid for one
care products that were set to expire at the end of 2020
year after the exclusion notice was published in the Federal
(until March 2021) and to grant new tariff exclusions on
Register and retroactive to the imposition of the tariffs
additional medical-care products. These new exclusions
(with the starting date varying by applicable list).
(originally effective from January 1 through March 31,
Exclusions are not specific to the requestor, so any party
2021) were reflected in 10 10-digit HTSUS tariff
importing a product covered by an exclusion may do so
subheadings and 9 specially prepared product descriptions,
under the exclusion and request retroactive tariff refunds
including clinical thermometers, disinfectants, surgical
from U.S. Customs and Border Protection (CBP).
gowns, and face shields. In March 2021, the USTR
Through January 31, 2020, the USTR received a total of
extended—through September 30, 2021—the 99 product
52,746 exclusion requests, pertinent to all four actions. Of
exclusions included in the December 2020 announcement.
these, 6,804 (13%) were granted and 45,942 (87%) were
In light of the recent spread of the Delta variant and
denied. (CRS could not determine the total number of
developments in the production capacity of U.S.-based
specific requests submitted between March and June 2020
manufacturers to satisfy various national needs, the USTR
or how many of these were granted or denied.) Specifically,
published a Federal Register notice in August 2021
the exclusions are reflected in 99 10-digit HTSUS tariff
requesting public comments on whether any of these 99
subheadings and 2,129 specially prepared product
exclusions should be further extended for six months. The
descriptions—all of which cover at least 6,804 separate
agency will collect comments through its comments portal
requests (Figure 1). Because most exclusions apply to
until September 27, 2021. The USTR will evaluate each
specific products within a relevant subheading—not to
extension request on a case-by-case basis, taking into
entire subheadings, CRS could not determine the exact
account continuing U.S. efforts in the battle against the
amount of trade covered by the exclusions. The USTR also
COVID-19 pandemic and the potential impact that further
issued extensions to certain exclusions. They apply to 52
extensions could have in countering or eliminating China’s
(of the 99) HTSUS subheadings and 516 (of the 2,129)
trade practices covered in the Section 301 investigation.
specially prepared product descriptions. These extensions
have expired or are set to expire in September 2021.
Issues for Congress
COVID-19 and Medical-Care Products
In recent years, some Members have introduced legislation
to amend Title III of the Trade Act of 1974, while also
The USTR announced in March 2020 that, prior to the
raising the issue of establishing or streamlining an
COVID-19 outbreak, the agency had been working with the
exclusion process during hearings and in letters to the
U.S. Department of Health and Human Services “to ensure
USTR. Some of the legislative proposals have included
that critical medicines and other essential medical products
measures to require greater congressional consultation or
were not subject to additional Section 301 tariffs.”
approval before trade restrictions are imposed, modified, or
Consequently, the United States had not imposed tariffs on
waived pursuant to Section 301 or to establish a formal
certain critical products, such as ventilators, oxygen masks,
product exclusion process (e.g., the American Business
and nebulizers. At the time, the USTR indicated that it had
Tariff Relief Act of 2019 and the Import Tax Relief Act of
been prioritizing the review of requests for exclusions on
2019). More recently, on June 8, 2021, the Senate passed
medical care products, resulting in exclusions granted on
the United States Innovation and Competition Act of 2021
basic medical supplies (e.g., gloves and hospital gowns).
(S. 1260), which, if enacted, would suspend tariffs—
In March 2020, the USTR began to exempt certain medical
including those imposed under Section 301—on certain
products from Section 301 tariffs in several rounds of
goods needed to combat the COVID-19 pandemic and
exclusions. CRS could not determine exactly how many of
would formalize the general process for excluding imports
them were exempted on the basis of COVID-19 concerns,
from Section 301 tariffs.
as the USTR does not specify the rationale for granting
As the Biden Administration reviews the Section 301
exclusions in its announcements. While some products can
actions against China and possibly makes use of Section
be easily identified, there are others with known or potential
301 authorities in a number of ongoing investigations
medical uses—or inputs for the manufacture thereof—that
initiated under the Trump Administration, Congress could
received exclusions but whose ultimate purpose cannot
also engage with the Administration to develop and
always be ascertained from HTSUS subheadings or the
implement specific guidelines for when and how to grant
provided product descriptions (e.g., organic chemicals or
and extend exclusions. This could potentially promote
textiles for the manufacture of pharmaceuticals or PPE).
transparency, consistency, and proper application of
Recent New Exclusions and Extensions
standards in reviewing exclusion requests, thereby helping
In March 2020, the USTR published a Federal Register
to ensure that the USTR carries out Section 301 objectives
notice seeking comments to determine if further
as prescribed by Congress.
modifications to the Section 301 tariffs on U.S. imports of
from China were necessary to respond to the COVID-19
Andres B. Schwarzenberg, Analyst in International Trade
pandemic in the United States. The new comment period
and Finance
closed in June 2020. Comments could be submitted
IF11582
regarding any medical product subject to Section 301
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Section 301: Tariff Exclusions on U.S. Imports from China


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https://crsreports.congress.gov | IF11582 · VERSION 11 · UPDATED

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