Updated February 17, 2022
Section 301 Tariff Exclusions on U.S. Imports from China
In 2018, the U.S. Trade Representative (USTR) determined,
to change these practices, the United States imposed
pursuant to an investigation under “Section 301” (Title III
additional tariffs, of up to 25%, on certain U.S. imports
of the Trade Act of 1974, 19 U.S.C. §§2411-2420), that
from China under four separate actions (per Lists 1-4).
China’s acts, policies, and practices related to technology
During the Section 301 notice, hearing, and comment
transfer, intellectual property (IP), and innovation were
period on proposed tariff increases, the USTR heard
unreasonable or discriminatory and burdened or restricted
numerous U.S. stakeholders who expressed concerns about
U.S. commerce. To counter them and obtain their
how additional tariffs could affect U.S. businesses and
elimination, the Trump Administration used Section 301
consumers. In response, for each Section 301 action
authorities to impose four rounds of increased tariffs on
regarding a new list of covered products, the USTR created
about two-thirds of U.S. imports from China. However, to
a process whereby interested parties could request that a
avoid harm to U.S. interests, the USTR introduced a new
particular product be excluded from the tariffs, subject to
policy allowing stakeholders to request “tariff exclusions”
certain criteria. Title III of the Trade Act of 1974 does not
for U.S. imports that would otherwise have been subject to
outline a formal process for exclusions or require the USTR
tariffs. Some policymakers and stakeholders have raised
to establish one. The determination to do so appears to be
concerns about the implementation of the exclusion request
solely at the USTR’s discretion.
process.
With the COVID-19 pandemic, the agency began to
In particular, some Member of Congress have questioned
prioritize the review of exclusion requests concerning
USTR’s ability to “pick winners and losers” through
medical products in short supply. Separately, the USTR
granting or denying requests or have pushed for broad tariff
also requested public comments on whether to remove
relief amid concerns about the negative impact of tariffs on
additional products covered by any list that were relevant to
the U.S. economy. This has been the case particularly in the
the U.S. response to the pandemic. As a result, in 2020 and
aftermath of the Coronavirus Disease 2019 (COVID-19)
2021, it granted new exclusions or extensions for certain
pandemic, which has affected the United States’ ability to
medical care products.
obtain certain products domestically or from countries other
than China. Other Members oppose granting any exclusions
Figure 1. Section 301 Exclusions
on the ground that doing so may undermine Section 301’s
effectiveness at addressing China’s unfair trade practices or
hinder U.S. efforts to incentivize domestic manufacturing
of certain critical goods. The agency established an
exclusion process for each of the four stages of tariff
increases under Section 301, as well as opportunities for
interested parties to submit comments on whether to extend
or reinstate exclusions—all of which have now closed.
The Biden Administration continues to review its trade
strategy for China, thus far announcing potential renewal of
the Section 301 tariff exclusion process and focusing on
enforcement of the U.S.-China “Phase One” trade
agreement. However, the USTR’s 2021 actions were not
aimed at providing broader tariff relief. They were limited

Source: CRS with information from the Office of the USTR.
to extending unexpired exclusions on medical supplies
Note: Figures may not reflect amendments to product-specific exclusions and
relevant to combatting the COVID-19 pandemic and
do not include requests submitted on or after March 25, 2020, in response to
requesting comments on whether to reinstate exclusions
85 FR 16987. However, exclusions granted through December 2020 and noted
that were previously extended.
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
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Section 301 Tariff Exclusions on U.S. Imports from China
actions, the approval rates under the third and fourth actions
Section 301 tariffs on U.S. imports from China. Interested
were 5% and 7%, respectively.
parties could submit comments through December 1, 2021,
According to the USTR, all requests were evaluated on a
supporting (or opposing) the reinstatement of a specific
case-by-case basis. The agency indicated that, in
exclusion extension, including for how long it should be
determining which requests to grant, it considered the
reinstated. The 549 exclusions eligible for reinstatement—
following: (1) availability of the product in question from
all of which were previously extended and had expired or
non-Chinese sources, (2) attempts by the importer to source
were set to expire soon—are reflected in 563 specially
prepared product descriptions (“
the product from the United States or third countries, (3) the
specific products”) or 10-
digit HTS subheading (“product categories”
extent to which the imposition of Section 301 tariffs on the
). Some of these
particular product will cause severe economic harm to the
exclusions covered products with known or potential
importer or other U.S. interests, and (4) the strategic
medical uses related to the U.S. response to the COVID-19
importance of the product to “Made in China 2025” or other
pandemic. Notably, parties were not able to petition the
Chinese industrial programs. Past exclusions were also
USTR for new exclusions or extensions to expired
granted for reasons that are thought to include, among
exclusions that were not previously extended.
others, U.S. national security interests and demonstrable
The USTR indicated that it would evaluate each extension
economic hardship from the tariffs for small businesses.
request on a case-by-case basis, applying some of the same
Through January 2020, the USTR received a total of 52,746
criteria it used for granting exclusions during 2018-2020.
exclusion requests, pertinent to all four actions. Of these,
While it did not announce a timetable for providing
6,804 (13%) were granted and 45,942 (87%) were denied.
responses to filed comments, the agency indicated that it
(CRS could not determine the total number of specific
will publish decisions on reinstated exclusions through
requests submitted between March and June 2020 or how
Federal Register notices and that the exclusions will be
many of these were granted or denied.) Specifically, the
retroactive to October 12, 2021. Exclusions apply generally
exclusions were reflected in 99 10-digit HTSUS tariff
to specified products, so any party importing a product
subheadings and 2,129 specially prepared product
covered by a reinstated exclusion may file a claim.
descriptions—all of which cover at least 6,804 separate
Importers whose goods entered or were withdrawn from
requests (Figure 1). Because most exclusions applied to
warehouse for consumption on or after that date may
specific products within a relevant subheading, not to entire
request tariff refunds from U.S. Customs and Border
subheadings, CRS could not determine the exact amount of
Protection (CBP), provided that CBP has not already
trade covered by the exclusions. Separately, the USTR also
calculated the final duties owed by the time the importers
issued extensions to certain exclusions. They applied to 52
file the refund claim.
(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 May 2022.
to amend Title III of the Trade Act of 1974, while also
COVID-19 and Medical-Care Products
raising the issue of establishing or streamlining an
In March 2020, the USTR began to exempt certain medical
exclusion process during hearings and in letters to the
products from Section 301 tariffs in several rounds of
USTR. Some of the legislative proposals have included
exclusions. CRS could not determine exactly how many of
measures to require greater congressional consultation or
them were exempted on the basis of COVID-19 concerns,
approval before trade restrictions are imposed, modified, or
as the USTR does not specify the rationale for granting
waived pursuant to Section 301 or to establish a formal
exclusions in its announcements. While some products can
product exclusion process (e.g., the American Business
be easily identified, there are others with known or potential
Tariff Relief Act of 2019 and the Import Tax Relief Act of
medical uses—or inputs for the manufacture thereof—that
2019). More recently, in June 2021, the Senate passed the
received exclusions but whose ultimate purpose cannot
United States Innovation and Competition Act of 2021 (S.
always be ascertained from HTSUS subheadings or the
1260), which, if enacted, would suspend tariffs—including
provided product descriptions (e.g., organic chemicals or
those imposed under Section 301—on certain goods needed
textiles for the manufacture of pharmaceuticals or PPE).
to combat the COVID-19 pandemic and would formalize a
process for excluding imports from Section 301 tariffs.
At the same time, the USTR requested comments to
determine if further modifications to the Section 301 tariffs
As the Biden Administration reviews the Section 301
on U.S. imports from China were necessary to respond to
actions against China and possibly makes use of Section
the COVID-19 pandemic in the United States. In response
301 authorities (e.g., to counter or obtain the elimination of
to these comments and input from advisory committees, in
other Chinese practices that may disadvantage or
December 2020, the USTR determined to extend 80
discriminate against U.S. exports, firms, and workers),
existing exclusions and grant 19 new ones—all on medical-
Congress could also engage with the Administration to
care products. These 99 exclusions (originally effective
develop and implement specific guidelines for when and
January-March 2021) were subsequently extended through
how to grant and extend exclusions. This could potentially
the end of November 2021, and 81 of them were recently
promote transparency, consistency, and proper application
extended again through May 31, 2022.
of standards in reviewing exclusion requests, thereby
Reinstating Previous Tariff Exclusions
helping to ensure that the USTR carries out Section 301
objectives as prescribed by Congress.
In October 2021, the USTR published a Federal Register
notice seeking comments on whether to reopen the process
Andres B. Schwarzenberg, Analyst in International Trade
by which U.S. stakeholders could apply for exclusions from
and Finance
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Section 301 Tariff Exclusions on U.S. Imports from China

IF11582


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https://crsreports.congress.gov | IF11582 · VERSION 12 · UPDATED

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