Updated September 22, 2023
Section 301 Tariff Exclusions on U.S. Imports from China
In 2018, the U.S. Trade Representative (USTR) determined,
During the Section 301 notice, hearing, and comment
pursuant to an investigation under “Section 301” (Title III
period on proposed tariff increases, the USTR heard from
of the Trade Act of 1974, 19 U.S.C. §§2411-2420), that
numerous stakeholders who expressed concerns about how
China’s acts, policies, and practices related to technology
additional tariffs could affect U.S. firms and consumers. In
transfer, intellectual property (IP), and innovation were
response, for each new list of covered products, the USTR
unreasonable or discriminatory and burdened or restricted
created a process whereby interested parties could request
U.S. commerce. To counter them and obtain their
that a particular product be excluded from the tariffs,
elimination, the Trump Administration used Section 301
subject to certain criteria. Title III of the Trade Act of 1974
authorities to impose four rounds of increased tariffs on
does not outline a formal process for exclusions or require
about two-thirds of U.S. imports from China. To avoid
the USTR to establish one. The determination to do so
harm to U.S. interests, the USTR introduced a new policy
appears to be solely at the USTR’s discretion.
allowing stakeholders to request “tariff exclusions” for U.S.
With the COVID-19 pandemic, the agency began to
imports that would otherwise have been subject to tariffs.
prioritize the review of exclusion requests concerning
Some policymakers and stakeholders have raised concerns
medical products in short supply. Separately, the USTR
about the implementation of the exclusion request process.
also requested public comments on whether to remove
In particular, some Member of Congress have questioned
additional products covered by any list that were relevant to
USTR’s ability to “pick winners and losers” through
the U.S. response to the pandemic. As a result, it granted
granting or denying requests or have pushed for broad tariff
new exclusions or extensions for certain of these products.
relief amid concerns about the negative impact of tariffs on
Section 301 Tariff Exclusion Process
the U.S. economy. This was the case particularly in the
The tariff exclusion process enabled interested parties to
aftermath of the COVID-19 pandemic, which affected the
petition for an exemption from the Section 301 tariff
United States’ ability to obtain certain products
increases for specific imports classified within a 10-digit
domestically or from countries other than China. Other
Harmonized Tariff Schedule of the United States (HTSUS)
Members oppose granting any exclusions on the ground
subheading. The time window to submit requests is closed,
that doing so may undermine Section 301’s effectiveness at
addressing China’
but the USTR is reviewing all actions related to the
s unfair trade practices or hinder U.S.
investigation, including decisions on whether and how to
efforts to incentivize domestic manufacturing of certain
accept new exclusion requests (see “Four-Year Review
critical goods. The agency established an exclusion process
Process” discussion below). While the USTR approved, on
for each of the four stages of tariff increases under Section
average, 35% of new requests under the first two actions,
301, as well as opportunities for interested parties to submit
the approval rates under the third and fourth actions were
comments on whether to extend or reinstate exclusions.
5% and 7%, respectively.
The Biden Administration continues to review its trade
According to the USTR, all requests were evaluated on a
strategy for China. Actions by the USTR in 2021 and 2022
case-by-case basis. The agency indicated that, in
were not aimed at providing broader tariff relief. They were
determining which requests to grant, it considered the
limited to extending unexpired exclusions on medical
following: (1) availability of the product in question from
supplies relevant to combatting the COVID-19 pandemic
non-Chinese sources; (2) attempts by the importer to source
and reinstating certain exclusions that were previously
the product from the United States or third countries; (3) the
extended. In May 2022, the agency announced a review of
extent to which the imposition of Section 301 tariffs on the
all Section 301 actions against China.
particular product will cause severe economic harm to the
Background
importer or other U.S. interests; and (4) the strategic
In August 2017, long-standing concerns over China’s
importance of the product to “Made in China 2025” or other
policies on IP, subsidies, technology, and innovation led the
Chinese industrial programs. Past exclusions were also
USTR to launch an investigation—under Section 301—into
granted for reasons that are thought to include, among
those policies and their impact on U.S. stakeholders. The
others, U.S. national security interests and demonstrable
investigation concluded that four broad policies or practices
economic hardship from the tariffs for small businesses.
justified U.S. action: (1) China’s forced technology transfer
Through January 2020, the USTR received a total of 52,746
requirements, (2) cyber-enabled theft of U.S. IP and trade
new exclusion requests, pertinent to all actions. Of these,
secrets, (3) discriminatory and non-market-based licensing
6,804 (13%) were granted and 45,942 (87%) were denied.
practices, and (4) state-funded strategic acquisition of U.S.
(CRS could not determine the total number of specific
assets. Subsequently, as part of its efforts to pressure China
requests submitted between March and June 2020 or how
to change these practices, the United States imposed
many were granted or denied.) Specifically, the exclusions
additional tariffs, of up to 25%, on certain U.S. imports
were reflected in 99 10-digit HTSUS tariff subheadings and
from China in four separate lists (Lists 1-4A).
2,129 specially prepared product descriptions—all of which
cover at least 6,804 separate requests (Figure 1). Because
https://crsreports.congress.gov
Section 301 Tariff Exclusions on U.S. Imports from China
most exclusions applied to specific products within a
already calculated the final duties owed by the time the
relevant subheading, not to entire subheadings, CRS could
importers file the refund claim.
not determine the exact amount of trade covered by the
Four-Year Review Process
exclusions. Separately, the USTR also issued extensions to
In May 2022, the USTR began the statutory four-year
certain exclusions. They applied to about 52 (of the 99)
review of the Section 301 actions taken against China. The
HTSUS subheadings and 516 (of the 2,129) specially
agency determined that two separate actions had been taken
prepared product descriptions. These extensions expired or
as part of the investigation (Lists 1 and 2), and that they had
are set to expire in December 2023.
been subsequently modified by imposing additional duties
Figure 1. Section 301 Exclusions
on supplemental lists of products (Lists 3 and 4A), as well
as by temporarily removing or suspending duties on some
of them through exclusions. It announced that the first step
of this review process would be to notify representatives of
domestic industries that benefit from the trade actions (as
modified) of their possible termination, and to offer them
the opportunity to request their continuation. The agency
announced in September 2022 that it had received several
such requests and that as a result, it would keep the actions
in place—subject to possible further modifications—and
proceed with the second phase of the review process.
To aid in this review, the USTR opened a separate portal
(public docket) for interested parties to submit comments
on, among other matters, (1) the effectiveness of the action
in achieving its objectives, (2) the effects of such actions on
Source: CRS with information from the Office of the USTR.
the U.S. economy, including on consumers, and (3) other
Note: Figures may not reflect amendments to product-specific exclusions and
potential actions that could be taken. Parties could submit
do not include requests submitted on or after March 25, 2020, in response to
comments between November 2022 and January 2023.
85 FR 16987. However, exclusions granted through December 2020 and noted
here may have been informed by those requests.
Through January 18, 2023, the agency received 1,498
COVID-19 and Medical-Care Products
separate submissions.
In light of the spread of the Delta variant in summer 2021
In July 2023, the USTR informed Congress that it “expects
and developments in the production capacity of U.S.-based
to complete the four-year review in the fall of 2023.”
manufacturers to satisfy various national needs, the USTR
Issues for Congress
sought and reviewed public comments on whether 99
In recent years, some Members have introduced legislation
exclusions on COVID-19 response products—originally
to amend Title III of the Trade Act of 1974, while also
announced in December 2020—needed to be extended. In
raising the issue of establishing or streamlining an
response to comments and the advice from advisory
exclusion process during hearings and in letters to the
committees, the USTR extended many of them in
USTR (e.g., §73001 in S. 1260). Some policymakers and
November 2021. The agency has extended these exclusions
analysts contend that the tariffs should be “recalibrated” so
further on several occasions, most recently in September
they are better aligned with U.S. economic and strategic
2023 through December 2023. (Some of the 77 current
priorities or that they be partly lifted to ease the financial
COVID exclusions also have been extended separately as
burden on certain U.S. firms and consumers. Others have
part of the reinstatement process announced in October
emphasized the importance of maintaining the tariffs, which
2021—see below.)
in their view provide “leverage” for future U.S.-China trade
Reinstating Previous Tariff Exclusions
negotiations or pressure China to reform its unfair trade
In October 2021, the USTR requested comments on
practices. Some have also touted them as an effective tool
whether to reinstate 549 exclusions that had expired or were
for promoting supply chain “resiliency” or incentivizing
set to expire soon. (Parties were not able to petition the
domestic manufacturing.
USTR for new exclusions or extensions to expired
As the Biden Administration reviews the actions against
exclusions that were not previously extended.) In response
China and possibly makes use of Section 301 authorities
to these comments and the advice from advisory
(e.g., to counter or obtain the elimination of other Chinese
committees, the agency announced in March 2022 that it
practices that may disadvantage or discriminate against
would reinstate or further extend 352 of the 549 eligible
U.S. firms and workers), Congress could also engage with
exclusions. The exclusions—retroactive to October 12,
the Administration to develop and implement guidelines for
2021 and originally set to expire at the end of 2022—have
when and how to grant and extend exclusions. This could
been extended twice, most recently in September 2023
potentially promote transparency, consistency, and proper
through December 2023.
application of standards in reviewing requests, thereby
Exclusions apply generally to specified products, so any
helping to ensure that the USTR carries out Section 301
party importing a product covered by an exclusion may file
objectives as prescribed by Congress.
a claim. Importers whose goods entered or were withdrawn
Andres B. Schwarzenberg, Specialist in International
from a warehouse for consumption on or after October 12,
2021, may request tariff refunds from U.S. Customs and
Trade and Finance
Border Protection (CBP), provided that CBP has not
IF11582
https://crsreports.congress.gov
Section 301 Tariff Exclusions on U.S. Imports from China
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https://crsreports.congress.gov | IF11582 · VERSION 18 · UPDATED