Traditional Trade Remedy Tools
Antidumping and Countervailing Duties
Antidumping and countervailing duty (AD/CVD) rules are the first line of defense against what are determined to be unfair imports. These measures are undertaken on a product- and country-specific basis so they can be narrowly focused on exactly which imports are injuring the US industry. They can also be paired with other orders and other trade actions to broaden the remedy. Title VII of the Tariff Act of 1930, as amended, authorizes import duties to be imposed on foreign merchandise that is being, or is likely to be, sold in the United States at less than its fair value, which is calculated in accordance with a methodology set out in US Commerce Department (DOC) regulations; or the manufacture, production or export of which is being subsidized by a government. In both types of cases, there must also be a finding that a US industry is being materially injured or is threatened with material injury, or the establishment of a US industry is being materially impaired for duties to be imposed.
DOC is currently administering 763 standing AD/CVD orders and more than 100 new investigations:
Steel. There are currently 307 AD/CVD orders in force and 24 investigations pending on iron and steel mill products, accounting for 40 percent of existing AD/CVD orders on all products and 24 percent of new investigations. Product coverage includes basic steel mill flat products such as hot-rolled, cold-rolled and corrosion-resistant carbon steel, in coils or in sheets, strip or cut plates, as well as a broad range of stainless steel products. It also includes long products, such as bar, beams, rebar, wire rod and rails, both carbon and stainless. It also includes products manufactured from steel, such as pipe and tube, flanges, sinks and nails.
Chemicals. There are currently 109 AD/CVD orders in force and 21 investigations pending on chemicals and allied products, accounting for 15 percent of existing AD/CVD orders on all products and 24 percent of new investigations.
Autos. There are currently 40 AD/CVD orders in force and 21 investigations pending on automotive and other machinery, accounting for 21 percent of new investigations.
Solar. There are currently 13 AD/CVD orders in force on solar products. Product coverage includes crystalline silicon photovoltaic cells, whether or not assembled into modules, as well as other crystalline silicon photovoltaic products. Orders are in place on Cambodia, China, Malaysia, Taiwan, Thailand and Vietnam.
Country Coverage. China is subject to the largest number of orders and investigations, representing a solid third of standing orders and new investigations. China is followed by India, South Korea, Taiwan and Turkey, rounding out the top five and comprising another 25 percent of all orders.
Process
Any interested party representing a US industry may file petitions simultaneously with DOC, which will examine the amount of dumping and/or subsidization, and the US International Trade Commission (ITC), which will examine the extent of the injury to the US domestic industry. If the requirements are met, investigations are generally initiated within 20 days. Petitions and investigations are product and country specific, which allows the remedy to be laser focused.
The ITC will issue a preliminary determination within 45 days from initiation. If the ITC determination is affirmative, the investigation will continue and the DOC will issue its preliminary determination within 65 (for subsidy investigations) to 140 (for dumping investigations) days and its final determination within 140 (for subsidy investigations) to 215 (for dumping investigations) days, both from initiation. If the DOC final determination is affirmative, the investigation will continue and the ITC will issue its final determination within 45 days of the DOC final determination. If affirmative, an order will be issued within 7 days from the date of the final ITC determination. All of these deadlines can be extended under certain circumstances.
Once an order is issued, it is eligible for review and adjustment annually by the DOC in a separate process with more extended deadlines. DOC can also consider “changed circumstances” about an order’s continued application in a separate process. Finally, under WTO rules and US law, both DOC and the ITC must review the order every five years to determine whether dumping or subsidies and injury would likely resume or continue if the order is revoked.
Remedy
DOC is authorized to impose duties in the amount of the “dumping” – i.e., the amount by which the price in the home market exceeds the price in the United States – or the amount of the subsidy. This can be determined on an average or transaction basis, depending on the circumstances. The complex methodology is spelled out in detailed regulations.
In addition to the imposition of duties, DOC is also authorized to suspend an antidumping or countervailing duty investigation by accepting a “suspension agreement,” under which the exporters and producers or the foreign government agree to modify their behavior so as to eliminate dumping or subsidization or the injury caused thereby. If accepted, DOC will continually monitor compliance with the agreement.
WTO Rules on Antidumping, Subsidies and Countervailing Duties
All WTO members are signatories to WTO agreements that set forth the rules members must follow in applying AD/CVD determinations. Members must adjust their laws and implementation of those laws so that they are compliant with WTO rules. The WTO Antidumping Agreement, formally called The Agreement on Implementation of Article VI of GATT 1994, sets forth very detailed rules for determining whether dumping has occurred and whether dumped imports have resulted in material injury or threat thereof to a domestic industry. The WTO Agreement on Subsidies and Countervailing Measures governs which kinds of subsidies are prohibited under the WTO and must be terminated or be subject to trade retaliation from the country harmed by the subsidy. It also delineates rules in countervailing duty cases for determining whether imports have been subsidized and whether they have resulted in material injury or threat thereof to a domestic industry. US law was changed to comply with these agreements by the Uruguay Round Agreements Act (URAA), which went into effect on January 1, 1995. Among the more substantive WTO rule changes implemented under the URAA was a process calling for a “sunset review” of antidumping and countervailing duty orders every five years. Under the sunset review process, DOC determines whether dumping or countervailable subsidies would be likely to continue or resume if an order were revoked, and the ITC determines whether injury would be likely to continue or resume in the absence of an order.
What You Need To Know
AD/CVD Duties Are Assessed Retroactively. This generally means that, if an order is in place, you will import your merchandise, post a cash deposit at a published duty rate and not know for up to several years if an additional or lesser amount will be required. Reviews can be conducted annually to determine the assessment rate for the material that entered over the preceding year and to adjust the level of the cash deposit going forward. If no review is requested, at a certain point the material will liquidate at the rate posted on entry. Many importers unfamiliar with this process have been surprised by Customs bills for millions of dollars. Because everything is made available to the public and importers are obligated to be informed before entering merchandise, there is no recourse at this point. It is, therefore, critical to know what to expect before you import.
Duties and Tariffs Cumulate. In most cases, duties and tariffs are imposed on an ad valorem basis and calculated based on the declared entered value of the merchandise on Customs import documentation. Antidumping and countervailing duties, safeguard tariffs and other tariffs imposed pursuant to Section 232 or Section 301 usually all cumulate in addition to any normal duties that apply.
The Impact of Additional Import Duties Can Be Severe. For foreign producers, AD/CVD duties can reduce or cut off access to the US market, and opportunities to terminate an order come only every five years. For importers of record, an order can lead to a very high bill. For end users, high dumping margins can raise prices and impact competitiveness. High duties can also disrupt supply chains for end users. Termination of an antidumping investigation is generally more likely in the injury phase of the investigation than at the DOC.
US Exporters May Also Be Subject to Foreign Antidumping and Countervailing Duty Cases. While the United States was an early and frequent user of AD/CVD laws, the rest of the world has over time put in place their own such laws and procedures. The DOC cites existing orders against US exporters in 25 jurisdictions, with the most cases being brought against US exporters by China. In all, DOC reports 37 jurisdictions with some combination of AD, CVD and safeguards laws.
Policy Priorities Sometimes Collide. The imposition of import duties can have an adverse impact on other trade priorities. A recent example is the DOC findings of circumvention of AD/CVD orders on solar cells and modules from China.
DOC has the authority to extend AD/CVD duties imposed on imports from one country to imports from third countries when it finds that exporters are “circumventing” the original antidumping order through the third country. DOC may find circumvention when merchandise subject to an existing AD/CVD order undergoes what is termed “minor alterations” in a third country and is then exported to the United States.
DOC determined in August 2023 that US imports of certain solar cells and modules that had been completed in Cambodia, Malaysia, Thailand or Vietnam, using certain parts and components from China and then subsequently exported from those countries to the United States, were circumventing the existing antidumping order on Chinese solar cells and modules. DOC would normally have required importers of Southeast Asia-completed solar cells and modules to begin making cash deposits with US Customs immediately.
In this case, however, US solar energy providers were temporarily relieved of paying cash deposits and duties due to an unusual intercession by the Biden Administration, which made clean energy production a policy priority. US-based solar energy producers complained that a circumvention order against the Southeast Asia-completed solar cells would leave them without an adequate supply of the solar panels and modules they needed for their solar-power generating facilities. In June 2022, two months following the initiation of the DOC’s circumvention inquiry, then-President Biden issued a proclamation declaring an emergency with respect to the availability of sufficient electricity generation capacity in the United States, pointing to an “acute shortage” of solar modules and module components that was putting near-term US solar capacity additions at risk.
Noting that a high percentage of solar modules installed in the United States in recent years were imported from Southeast Asia, the proclamation ordered the Secretary of Commerce to consider permitting importation of solar cells and modules from the four countries free of the collection of cash deposits and duties for two years. DOC implemented the proclamation through a regulation.
The proclamation and subsequent regulation met with a mixed reaction in Congress, depending in part on whether constituents were US solar panel manufacturers or US solar energy providers. In 2023, the US Congress passed a joint resolution disapproving the DOC regulation implementing the Presidential Proclamation, declaring that “such rule shall have no force or effect.” The resolution was vetoed by President Biden and the Congress failed to override that veto. The proclamation expired on June 6, 2024, at which time US Customs started collecting cash deposits on imports. based on the company-specific rate for the company in China that exported the wafers to the producer/exporter in Cambodia, Malaysia, Thailand, or Vietnam to be incorporated in the solar cells or solar modules and ultimately imported into the United States. In the meantime, the US industry filed new petitions on imports from these countries, DOC conducted an investigation and the orders went into effect in April 2025.
Participating in the Antidumping or Countervailing Duty Process. Under US trade law, an “interested party” in an AD/CVD proceeding includes foreign producers and exporters, US importers, US producers, US wholesalers and trade associations representing those groups, as well as the governments of foreign producers and exporters and US unions representing workers making the product.
At DOC: It is critical that foreign companies and US importers chosen as mandatory respondents by DOC take part in AD/CVD investigations and reviews, as DOC will otherwise rely on “facts available” to determine the level of dumping, which almost always results in prohibitively high AD/CVD duties. The process is extraordinarily complex so it is prudent for those caught up in an investigation to seek professional representation.
At the ITC: Likewise, all interested parties – whether US producers, foreign producers, importers or purchasers – should take part in the ITC phase of AD/CVD proceedings, in which the ITC determines whether the imports subject to the investigation have caused or threaten to cause material injury to the domestic industry.
The ITC issues questionnaires to domestic producers, importers, purchasers and foreign producers of the covered product as part of its investigative process to gather data on which it will base its decision. Participation by US firms engaged in the production, importation or distribution of products subject to the investigation is mandatory, and the ITC has subpoena power to enforce this requirement. Moreover, it is particularly important for foreign exporters and US importers and purchasers to participate fully in the ITC process, including by testifying before the commissioners at the ITC’s public hearing.
Safeguards
Temporary safeguards are remedies designed to prevent or mitigate injury to US industries from increased imports and have generally been employed sparingly in the last 25 years. Section 201 of the Trade Act of 1974 (Section 201 or 201) authorizes the US International Trade Commission (ITC), an independent, nonpartisan, quasi-judicial federal agency, to investigate whether increased imports seriously injure, or threaten to injure, US industries and recommend to the President relief that would prevent or remedy the injury and facilitate industry adjustment to import competition.
Before being put into use by the first Trump Administration, the last Section 201 action was in 2002, when then-President George W. Bush imposed tariffs of up to 30 percent on imports of most steel products from most countries. In 2018, President Trump placed Section 201 tariff-rate quotas on large residential washing machines, which expired in 2023, and on solar cells and modules, which were extended by President Biden for four years in 2022.
Imports of solar cells and modules into the United States, for example, have been an issue for decades. The US Trade Representative found that China used state incentives, subsidies and tariffs to grow its market share from 7 percent in 2005 to 60 percent of the world’s solar cells and 70 percent of the world’s solar modules in 2017. Between 2012 and 2016 , import volumes grew 500 percent and prices fell by 60 percent. By the following year, only one US producer of both solar cells and modules and eight US producers of modules using imported cells remained.
In 2017, the ITC found that these products were being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or threat of serious injury, to the US domestic industry. In 2018, President Trump imposed a tariff-rate quota on imports of certain solar cells, with 30 percent tariffs on all other solar modules and products and imports exceeding the quota (i.e., a tariff-rate quota). The tariff level was set to 25 percent, decreasing by 5 percent for each of the three subsequent years. At its midterm review in 2021, the ITC found that the safeguard action continued to be necessary to prevent or remedy the serious injury to the domestic industry, and that there was evidence that the domestic industry was making a positive adjustment to import competition. In 2022, President Biden extended the safeguard action for an additional four years. In May 2024, President Biden removed the exclusion granted by the previous administration and imposed Section 201 tariffs on certain two-sides solar panels. The tariffs are set to expire on February 7, 2026.
Process
Any interested person representing the US industry, including firms, unions, trade associations or groups of workers may file a petition. Investigations may also be self-initiated by the ITC or based on a request from the US Trade Representative, the House of Representatives Ways and Means Committee or the Senate Finance Committee. The ITC must initiate promptly and complete its initial investigation into whether an article is being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry. The ITC must make its determination within 120 and 210 days, depending on whether certain “critical circumstances” exist and whether an investigation is extraordinarily complicated. The ITC must provide public notice, seek comment, hold public hearings and publish its findings.
If the ITC finds injury as a result of this investigation, it proceeds to the remedy phase, in which it makes recommendations for actions to address the injury, or threat thereof, to the domestic industry. The ITC must, in this phase as well, provide public notice, seek comment, hold public hearings and publish its findings.
Remedy
Available remedies include an increase in, or the imposition of, any duty; a tariff-rate quota; a modification or imposition of any quantitative restriction; other more appropriate adjustment measures, including the provision of trade adjustment assistance; or any combination of the actions above. The ITC may also recommend that the President undertake international negotiations to address the underlying cause of the increase in imports of the article or otherwise to alleviate the injury or threat; or implement any other action authorized under law that is likely to facilitate positive adjustment to import competition. The ITC must specify the type, amount and duration of the action it is recommending and submit its report to the President within 180 to 270 days after the petition is filed, depending on whether the petitioner alleges critical circumstances.
The President generally has 60 days to take action on the ITC’s report, which could include accepting, modifying or rejecting the ITC’s recommendation.
World Trade Organization Rules on Safeguards
The WTO Agreement on Safeguards sets out the basic rules relating to safeguards, including criteria for determining serious injury, notice and evidentiary requirements, which Section 201 closely follows. In addition, the Agreement on Safeguards sets time limitations for trade protection and adjustment, as well as rules for the circumstances under which countries subject to safeguards measures can seek compensation from the administering country in the form of reciprocal trade measures. Specifically, “The agreement envisages consultations on compensation for safeguard measures. Where consultations are not successful, the affected members may withdraw equivalent concessions or other obligations under GATT 1994. However, such action is not allowed for the first three years of the safeguard measure if it conforms to the provisions of the agreement and is taken as a result of an absolute increase in imports.
Many importers unfamiliar with the antidumping process have been surprised by Customs bills for millions of dollars.
What You Need To Know
Tariffs Are Paid by Importers and Consumers, Not Foreign Producers. Importers of record, which can be a subsidiary of a foreign company, a US retailer or an independent entity, pay the duties owed to the US Government from Section 201 tariffs, as well as those imposed under Section 232, Section 301 and US antidumping and countervailing duty laws . The cost of these duties is often passed on to the ultimate consumer of the product, which in many cases is a US manufacturer, so the price impact is not generally borne by the foreign producer
The ITC Is an Independent Agency. As noted above, the ITC is an independent, nonpartisan, quasi-judicial federal agency. While the six commissioners who decide ITC cases are appointed by the President with the approval of the US Senate, they are not a part of a presidential administration and may not be fired by the president except for cause.
Injury Standards in Section 201 Investigations Differ from Those in Other Cases. The process in Section 201 cases differs from antidumping and countervailing duty cases in a number of ways, including with respect to what constitutes injury to a domestic industry. In a Section 201 case the ITC investigates whether an article is being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry. The term "substantial cause" means a cause which is important and not less than any other cause.” In a dumping or countervailing duty case, the standard at the ITC is whether dumped or subsidized imports have materially injured a US industry or threatened that industry with material injury, a standard that is considered less stringent than “serious injury.” One potential reason for the distinction is that imports in a Section 201 case do not need to be considered unfairly traded for a remedy to be imposed, while in antidumping and countervailing duty cases they do. In addition, the final decision in a Section 201 case is made by the President, who has broad flexibility in determining remedy once an affirmative injury decision has been reached. In contrast, the level of duty protection in an antidumping or countervailing duty is determined by a complex formula involving very specific analyses of the importer’s costs and prices in the US market and its home market, the rules of which are set by statute and regulations.
The Public Has Input into the Section 201 Process at the ITC. Interested parties and consumers are given numerous opportunities to take part in a Section 201 investigation in both the injury and remedy stages of the proceedings and should strongly consider doing so. Input comes through answering questionnaires from the Commission and testifying at public hearings. Once the ITC initiates an investigation into whether imports of a product are a substantial cause of serious injury, the statute requires it to hold a public hearing to afford interested parties and consumers an opportunity to be heard. Other opportunities to testify or submit evidence include hearings to decide what remedy should be recommended to the President in the case of an affirmative injury finding; whether import relief should be extended beyond three years; whether import relief continues to be necessary to prevent or remedy serious injury and whether there is evidence that the industry is making a positive adjustment to import competition. In addition, in cases of an affirmative finding of injury, any firm in the domestic industry, union, relevant trade association, group of workers or state or local community may submit to the ITC a description of the actions they intend to take to facilitate adjustment to import competition.
The Public Has Input into the Section 201 Process at USTR. Once the ITC makes an affirmative finding of serious injury, USTR heads an interagency body that recommends what action the President should take. In the solar cells and modules Section 201 proceeding, the interagency Trade Policy Staff Committee issued a Federal Register notice seeking comments on whether a trade remedy in the case was appropriate, what that remedy should be, and the potential impact of such remedy on domestic industries and downstream consumers.
Judicial Review Is Available for International Trade Cases. Interested parties may appeal Section 201 decisions to the Court of International Trade, which has jurisdiction over cases involving US Customs and trade laws, including antidumping and countervailing duty, Section 232, Section 301 and Section 201 matters, among others.
Unfair Trade Practices
The last three US administrations have invoked a range of trade weapons in dealing with China, resulting in a seven-year trade war between the two countries characterized by tit-for-tat tariff fluctuations that have rattled global markets, disrupted US supply chains and resulted in losses for US exporters, especially in the agricultural sector. This chaotic situation was exacerbated in 2025 when President Trump raised tariffs on China to new heights by invoking his powers under the International Emergency Economic Powers Act. This led to bilateral tariff escalations reaching triple digits on both sides before being temporarily reduced as part of a 90-day truce reached in May. Given the current Trump Administration’s focus on reducing the $295.4 billion US trade-in-goods deficit with China and reshoring US manufacturing—formidable goals with global implications—this dispute will likely be reignited again and again.
While US-China trade tensions have existed for some time, they escalated during the first Trump Administration when USTR imposed tariffs on Chinese imports under several trade remedy measures, including Section 301(b) of the Trade Act of 1974, as amended (Section 301 or 301), which gives the United States Trade Representative the authority to investigate and take action to enforce trade agreements and address certain foreign trade practices that are “unjustifiable, unreasonable or discriminatory and burden or restrict United States commerce.”
In 2018, in a self-initiated Section 301 investigation, first Trump Administration determined that a range of Chinese acts and policies violated Section 301, including foreign ownership restrictions that force technology transfer; regulations that force the licensing of technologies by US firms on non-market-based terms; state-sponsored facilitation of acquisitions of US companies with cutting-edge technology by Chinese entities; and support of cyber theft of U.S. companies to access sensitive commercial information and trade secrets. USTR increased tariffs on imports of Chinese-origin goods in several tranches, amounting to a total exceeding $580 billion. China responded to each tranche with its own tariffs on imports of US products. China also filed a WTO dispute in 2018 and, in 2020, the WTO found that the US imposition of additional tariffs under Section 301 was a violation of US commitments under the WTO agreement. The United States has appealed this finding. The Biden Administration kept in place many of the Trump Administration’s Section 301 China tariffs and expanded the list of covered products as a result of its mandatory four-year review of the China Section 301 proceeding. Certain exclusions put in place by the first Trump Administration and the Biden Administration have been extended by the second Trump Administration through August 2025.
In 2025, the second Trump Administration imposed new Section 301 trade remedies against China in a proceeding addressing China’s practices in the maritime, logistics and shipbuilding sectors. The action was filed by several US labor unions during the Biden Administration. In its January 2025 report, issued four days before President Trump’s inauguration, USTR accused China of a three-decade long targeting of the maritime, logistics and shipbuilding sectors for global dominance during which it “employed increasingly aggressive and specific [market-share] targets that necessitate substitution by Chinese companies at the expense of foreign competitors.” USTR described “top-down industrial planning and targeting” as a “critical feature of China’s state-led, non-market economic system: and found “China’s targeting displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition, and creates dependencies on China, increasing risk and reducing supply chain resilience.” USTR found in its report that China had to a great extent already reached many of its goals in these sectors, taking “market share with dramatic effect:: raising China’s shipbuilding market share from less than 5 percent of global tonnage in 1999, to over 50 percent in 2023; increasing China’s ownership of the commercial world fleet to over 19 percent as of January 2024; and controlling production of 95 percent of shipping containers and 86 percent of the world’s supply of intermodal chassis, among other components and products.”After hearings and public comment, USTR announced the following trade remedies:
Steep, phased-in fees at US ports for vessel operators and vessel owners of China, a term that includes entities subject to the jurisdiction of, owned by or whose country of citizenship or principal place of business is in the People’s Republic of China (PRC), Hong Kong or Macau; as well as entities listed as a Chinese Military Company by the US Defense Department;
Phased-in service fees on non-Chinese operators of Chinese-built vessels;
Phased-in service fees on vessel operators of foreign vehicle carriers;
A phased-in requirement that a certain percentage of maritime transport of Liquefied Natural Gas exports be on U.S. vessels;
Additional duties on ship-to-shore cranes and on containers and certain other cargo handling equipment of China.
Domestic concerns with this action include the insufficient capacity of US ships to offset any significant decrease in availability, price and cost increases, as well as potential retaliation against US companies.
Process
Any interested person may file a petition, which USTR will review within 45 days and publish a determination on whether to initiate an investigation. USTR can also self-initiate an investigation. If an investigation is initiated, USTR will publish a summary of the petition and provide the opportunity for the presentation of views on the issues, which should include a public hearing.
Once initiated, USTR must request consultations with the relevant foreign government on the issues being investigated.
If consultations do not lead to a resolution, USTR must determine whether US rights under a trade agreement are being denied; an act, policy or practice violates, or is inconsistent with, the provision of, or otherwise denies benefits to the United States under, any trade agreement; or, an act, policy or practice is unjustifiable and burdens or restricts US commerce; or, an act, policy or practice is unreasonable or discriminatory and burdens or restricts US commerce. If an act, policy or practice falls under the first two categories, action is mandatory; if it falls under the third category, action is discretionary depending on a number of factors.
The entire process takes about a year, unless it involves a trade agreement under which dispute settlement is required.
Remedies
USTR has a broad range of remedy options at its disposal to eliminate or compensate for the conduct in question, including the suspension or termination of trade concessions; duties or other import restrictions and binding agreements to eliminate the act, policy or practice, or provide compensatory benefits.
Four-Year Review
After a Section 301 trade remedy has been in place for four years, the US Trade Representative must either terminate the trade relief or conduct a review of the matter if requested to do so by the relevant domestic industries. The statute requires that USTR review the effectiveness of the relief, other actions that could be taken to provide relief and the effects of such actions on the US economy, including consumers.
World Trade Organization Rules on Dispute Settlement
The strengthening of the dispute settlement process for international trade disagreements is one of the most significant accomplishments of the Uruguay Round negotiations. Under the Dispute Settlement Understanding (DSU) that applies to covered WTO agreements, members have agreed to settle disputes relating to those agreements according to the rules of the WTO and in proceedings before the WTO Dispute Settlement Body. Under the DSU, members should not be unilaterally deciding that violations of WTO obligations have occurred. The DSU includes fairly detailed procedures for bringing disputes to the WTO, including timelines, evidentiary rules, consultation requirements and the type of countermeasures that may be applied when violations of a WTO agreement are found.
The last three US administrations have invoked a range of trade weapons in dealing with China, resulting in a seven-year trade war characterized by tit-for-tat tariff fluctuations that have rattled global markets, disrupted US supply chains and resulted in losses for US exporters, especially in the agricultural sector.
What You Need To Know
This Likely Won’t End Soon. Despite the temporary cessation of competing triple-digit US and China tariffs, discussed elsewhere in this article US exporters, importers and those whose supply chain runs through China should remain wary of bilateral flare-ups. The economic relationship between the United States and China, the two largest economies in the world, has been characterized by trade conflict for decades. That tension has escalated in recent years, with US concerns extending beyond China’s unfair trade practices to the national security implications of China’s access to US technology, direct investment in the United States and US critical infrastructure such as energy and telecommunications.
Chinese companies have been penalized for enabling Russia to evade US sanctions over its invasion of Ukraine; the Federal Communications Commission has taken action to bar Chinese sales of video surveillance equipment and Chinese telecom giants Huawei and ZTE have been banned from US telecommunications equipment sales in the United States; the United States also has tightened export controls on sales of high-end semiconductors to China; the United States has restricted outbound investment to China and the Biden, Trump and Obama Administrations have taken action under CFIUS to stop certain Chinese investments in the United States.
In its May 2024 Section 301 four-year review, USTR found that “despite some positive developments, China persists in efforts to transfer technology from U.S. companies and the burden of China’s technology transfer-related acts, policies, and practices on U.S. commerce has increased.” With its focus on technology and national security, the so-called US-China trade war seems to have morphed into a US-China technology cold war, with a focus on the uses of high technology and which country will dominate the next generations of IT. Nevertheless, despite these issues, US trade with China in goods alone totaled an estimated $582.4 billion in 2024. Goods exports were $143.5 billion; imports were $438.9 billion. The US goods trade deficit with China was $295.4 billion in 2024. US manufacturers, importers and exporters that compete with or do business with China need to be prepared for the landscape to keep changing. Businesses can take the initiative by diversifying supply chains and taking part in trade remedy proceedings.
Tariffs Are Paid by Importers and Consumers, Not Foreign Producers. As noted above, tariffs under Section 301 are ultimately paid by the US importer of record, and usually passed on to US consumers. The ITC in its study of the Economic Impact of Section 232 and 301 Tariffs on U.S. Industries notes that its own findings and those of outside studies indicate that “the cost of section 301 tariffs have been borne almost entirely by U.S. importers. Chinese exporters have largely maintained the same prices and U.S. importers have absorbed the costs of the tariffs through a combination of less-favorable margins for sellers and higher prices for consumers or downstream buyers.” US businesses anticipating new or increased tariffs should consider adding suppliers who are domestic or from countries not subject to tariffs to their supply chain.
Section 301 Tariffs Disrupt Supply Chains. Downstream US industries that rely on products subject to US tariffs may have difficulty finding suitable suppliers, especially for products with exacting specifications. Given the longevity and scope of the Section 301 and other US tariffs and the growing intensity of the US-China technology cold war, US industrial consumers that rely on Chinese inputs or retailers that sell final products made in China should anticipate possible long-term supply chain disruptions in the future and where possible look for alternative suppliers. The ITC in its report on the impact of the Section 232 and Section 301 tariffs cited numerous examples of importers complaining that the inputs they needed to make their product were either not made outside of China or not made to exacting specifications. For example, the ITC cited industry testimony indicating that “products such as information and communication technology devices …have complex supply chains because of strict specification and prequalification requirements from purchasers, making it difficult to switch sourcing in response to section 301 tariffs.” Other industry groups reported similar experiences in comments to the ITC, including communications equipment and electrical equipment manufacturers, the latter of which indicated problems sourcing batteries.
US Exporters Have Faced Retaliation in Response to Section 301 Tariffs. During the tit-for-tat US-China tariff barrage described elsewhere in this article, China followed its pattern from the first Trump and Biden Administrations by focusing to a great degree on the US agricultural sector, applying tariffs to US chicken, wheat, corn, sorghum, soybeans, pork, beef, seafood, fruits, vegetables and dairy products. China also restricted exports of rare earth materials to the United States and applied tariffs to US energy and industrial products. US companies subject to retaliatory tariffs should monitor Section 301 cases carefully and make contact with the Office of the US Trade Representative, the Commerce Department and their congressional representatives before tariffs are finalized, especially as certain industries are predictable targets for retaliatory tariffs.
The WTO Ruled Against the United States. In 2020, a WTO panel ruled against the United States in a dispute related to the United States’ imposition of Section 301 tariffs against China, which the United States imposed without getting authorization to do so from a WTO panel. As such, the focus of the case was on whether the United States’ unilateral imposition of tariffs violated the provisions of the WTO. The panel held that the Section 301 duties violated the WTO requirement that tariffs and trade rules apply equally to the products of all signatories—a concept known as most-favored-nation treatment. The panel also found that the tariffs exceeded the rates to which the United States was bound under the agreement. This ruling is still under appeal.