Latest Section 301 Tariff Changes: Impacts and Strategies for Your Business

The United States Trade Representative (USTR) implemented the final changes to the Section 301 tariffs, effective September 27, 2024. These updates not only adjust existing tariff rates, but also introduce new opportunities for exclusions. While most of the original May 2024 proposals were adopted, several significant modifications have been made.

New tariffs, new rates, and new exclusions

After reviewing over 1,000 comments received in the comment period, the USTR made several changes based on public feedback. While many of these changes increase the proposed tariffs across specific categories, they also provide some relief by granting exclusions within specific categories and extending the implementation of the tariffs in others.

According to census data published on the United Stated International Trade Commission (USITC) website, when looking at aggregate import data from the United States Census Bureau, these new tariffs will generate an additional $1.3 billion in duties a year at the maximum rates.

Most of the proposed changes to Section 301 were adopted from the initial proposal from May 2024, with a few key differences:

Section 301 tariff modifications and exemptions

• Face masks: Both surgical and non-surgical respirators and face masks will now increase to a maximum of 50% in 2026, a change from the original cap of 25%. Disposable face masks (classified under 6307.90.9870) are also now targeted at a 25% rate starting January 1, 2025.
• Rubber gloves: The original plan called for a maximum rate of 25% in 2026, but the USTR announced the rate for these gloves will be 50% in 2025 and increase to a maximum of 100% in 2026. This change has the highest impact once it hits the maximum rate. In fact, it will account for 28% of the additional duties.
• Needles and syringes: The 100% tariff originally planned for certain syringes (classified under 9018.31.0080) has now been pushed to 2026.
• Ship-to-shore gantry cranes: The USTR established an exclusion from the increase for these cranes that were ordered prior to May 14, 2024, and imported prior to May 14, 2026. The lengthy build time of these cranes would have made it punitive to importers that placed orders before the tariffs were announced.

New Section 301 tariff proposals

Tungsten

A new 25% tariff has been proposed for three tungsten product classifications in Chapter 81. The USTR believes these tariffs will reduce U.S. reliance on Chinese imports, support domestic manufacturing, and protect U.S. intellectual property and technologies. Tungsten is critical for sectors such as aerospace, automotive, defense, and medical. A Federal Register notice will soon open a public comment period for these items:

• 8101.94.00 (Tungsten, unwrought (including bars and rods obtained simply by sintering))
• 8101.99.10 (Tungsten bars and rods (other than those obtained simply by sintering), profiles, plates, sheets, strip, and foil)
• 8101.99.80 (Tungsten, articles nesoi)

Polysilicon and wafers

A 25% tariff has also been proposed for two product classifications in this space. The USTR believes these materials are crucial for manufacturing solar cells and semiconductors, and that China currently dominates global production, which threatens U.S. supply chains and economic security. Increasing tariffs on these products aims to encourage diversification away from China and support domestic manufacturing investments.

• 2804.61.00 (Silicon containing by weight not less than 99.99 percent of silicon)
• 3818.00.00 (Chemical elements doped for use in electronics, in the form of discs, wafers etc., chemical compounds doped for electronic use)

New exclusion potential

In addition to the initial 312 subheadings proposed in May, the USTR approved opening the exclusion comment process for the below subheadings. They've decided to focus on items in chapters 84 and 85 of the Harmonized Tariff Schedule (HTS), omitting those that only include parts, accessories, or general equipment. The additional subheadings are as follows:

• 8421.21.00 (Water filtering/purifying machinery)
• 8421.29.00 (Liquid filtering/purifying machinery)
• 8421.39.01 (Gas filtering/purifying machinery)
• 8428.70.00 (Industrial robots)
• 8443.19.30 (Printing machinery)

New exclusions granted

Within the realm of solar cells and the equipment needed to manufacture it, the USTR has decided to grant exclusions to the solar cell and wafer manufacturing equipment while declining to grant exclusions to solar module equipment. The public comments along with the availability of alternative sources outside of China were cited as the reason for the lack of exclusions on the module equipment. These exclusions are retroactive to January 1, 2024, and are listed below.

Given that these descriptions are specific, it's hard to say for certain what percentage of the total value of imports under those tariffs will qualify; however, in looking at 2023's import data there are over $257 million in imports within those categories.

HTS Number	Description
8486.10.0000	Silicon growth furnaces, including Czochralski crystal growth furnaces, designed for growing monocrystalline silicon ingots (boules) of a mass exceeding 700 kg, for use in solar wafer manufacturing.
8486.10.0000	Band saws designed for cutting or slicing cylindrical monocrystalline silicon ingots (boules) of an initial mass exceeding 400 kg into square or rectangular ingots (boules), for use in solar wafer manufacturing.
8486.10.0000	Machines designed to align and adhere square or rectangular monocrystalline silicon ingots (boules) of an initial mass exceeding 200 kg to plastic support boards on metal mounting plates to provide support during diamond wire sawing, for use in solar wafer manufacturing.
8486.10.0000	Diamond wire saws designed for cutting or slicing square or rectangular monocrystalline silicon ingots (boules) of an initial mass exceeding 400 kg into solar wafers of a thickness not exceeding 200 micrometers.
8486.10.0000	Wire guide roller machines, presented with diamond wire saws designed for slicing square or rectangular monocrystalline silicon ingots (boules) of an initial mass exceeding 400 kg into solar wafers of a thickness not exceeding 200 micrometers, all of the foregoing for use in solar wafer manufacturing.
8486.10.0000	Coolant fluid recycling machines, presented with diamond wire saws designed for slicing square or rectangular monocrystalline silicon ingots (boules) of an initial mass exceeding 400 kg into solar wafers of a thickness not exceeding 200 micrometers, all of the foregoing for use in solar wafer manufacturing.
8486.10.0000	Degumming machines designed to remove adhesives from solar wafers.
8486.20.0000	Texturing, etching, polishing, and cleaning machines designed to prepare, repair, clean, etch, polish or texture the solar wafer substrate, whether or not integrated with automation equipment for transferring solar wafers from one process station to the next, all the foregoing for use in solar wafer manufacturing.
8486.20.0000	Thermal diffusion quartz-tube furnaces, designed to diffuse dopant impurities into square or rectangular silicon wafers, whether or not integrated with automation equipment for transferring solar wafers from one process station to the next or boat loading or unloading machines, all the foregoing for use in solar cell manufacturing.
8486.20.0000	Plasma-enhanced or low-pressure chemical vapor deposition machines designed to deposit amorphous or nanocrystalline layers on one or both surfaces of a solar wafer, whether or not integrated with automation equipment for transferring solar wafers from one process station to the next, all the foregoing for use in solar cell manufacturing.
8486.20.0000	Physical vapor deposition (PVD) machines, designed to deposit a thin film of transparent conducting oxide on one or both surfaces of a solar wafer, whether or not integrated with automation equipment for transferring solar wafers from one process station to the next, all the foregoing for use in solar cell manufacturing.
8486.20.0000	Screen printing line machines, including sintering furnaces for printing conducting contacts on both surfaces of a solar wafer, whether or not integrated with automation equipment for transferring solar wafers from one process station to the next, and whether or not integrated with equipment for solar cell testing, all the foregoing for use in solar cell manufacturing.
8486.40.0030	Machines designed for transporting polysilicon material to growth furnaces and machines designed for transporting monocrystalline ingots (boules) and wafers throughout the solar wafer manufacturing process, including machines for loading or unloading solar wafers during the diamond wire slicing process.
8486.40.0030	Machines designed for lifting, handling, loading, or unloading of solar wafers of a thickness not exceeding 200 micrometers, for use in solar wafer manufacturing.

How will these Section 301 changes impact shippers?

With so many changes being made, it's easy to lose sight of what will have the largest impact on the trade community. While there are nearly 600 tariffs that are impacted with increases, nearly 90% of the impact is estimated to come from six headings based on 2023 import data.

The main points that have been getting news attention are the 100% tariff on electric vehicles as well as the changes to steel and aluminum; however, when reviewing the data, the largest impact will come from rubber gloves. Thankfully, these tariffs have a staggered implementation, giving importers time to consider alternative sourcing options. The six headings that make up 90% of the estimated duties are below. Please note this is calculated using the maximum rate for each category.

Heading Description	Estimated Additional Duties
Articles of apparel and clothing accessories (including gloves, mittens and mitts), for all purposes, of vulcanized rubber other than hard rubber	$368,437,100
Electronic integrated circuits; parts thereof	$316,604,978
Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars	$281,724,433
Semiconductor devices (for example, diodes, transistors, semiconductor-based transducers); photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED), whether or not assembled with other light-emitting diodes (LED); mounted piezo-electric crystals; parts thereof	$114,981,313
Aluminum plates, sheets and strip, of a thickness exceeding 0.2 mm	$65,313,754
Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel	$26,595,502

These tariffs are likely here to stay

With these changes, the Biden-Harris administration has solidified its stance on maintaining Section 301 tariffs on key goods from China. Despite concerns about potential price increases and Chinese retaliation, these tariffs are now firmly in place following recent proposals. The willingness of the USTR to consider public comments does speak to them working with the trade community, but the exclusions (granted and proposed) all point to their stance on protecting and strengthening U.S. manufacturing.

There are two potential paths forward, which will be determined by the results of the upcoming election:

• Vice President Kamala Harris is expected to maintain President Biden's trade agenda, focusing on not tolerating unfair trade practices from China. The administration defends these tariffs as necessary for revitalizing U.S. infrastructure and manufacturing, countering anti-competitive Chinese practices. Future plans include maintaining and potentially increasing existing Section 301 tariffs on Chinese imports.
• In contrast, former President Donald Trump has proposed increasing tariffs on all U.S. imports by 10 percentage points and on Chinese imports by 60 percentage points if reelected. He plans to use various statutes to impose universal tariffs of 10-20% on all imports, totaling over $3 trillion annually. During his first term, President Trump used several trade laws to impose tariffs without congressional consent, targeting steel, aluminum, and Chinese imports. If reelected, President Trump intends to enact substantial tariffs immediately, aiming to reduce deficits and counter foreign exploitation of U.S. markets.

Plan now for these changes

There are a few things you can do to help keep your business ahead of these changes. First, staying informed is crucial for importers navigating Section 301 tariffs, as even minor modifications can have a massive impact on your business.

1. Regularly check for updates on tariff changes and new public comment periods

Engaging in the comment process allows you to voice concerns or support for specific exclusions, potentially influencing future tariff adjustments. The changes discussed in this article were guided by feedback from the trade community. Whether it's arguing for or against additional tariffs, make your voice heard.

2. Check to see if you qualify for exclusions

There are new exclusions in place, take advantage of them if you can. The scope of the exclusions is specific, but they are also retroactive, so there's a chance to potentially recoup duties. For impacted importers, the relief they provide can be substantial. Check now to see if you qualify-you don't want to miss the window for post entry corrections or protests.

3. Evaluate your supply chain based on this knowledge

You need to know the answers to questions like, "Which of your items will now carry additional duties and where can I source these?" Reviewing your existing processes can offer a lot of insight into areas of opportunity. For example, conducting an alternative sourcing analysis can help determine alternative suppliers to consider purchasing goods. And knowing if there are exclusions you can take advantage of can prevent disruptions, maintain the flow of goods, and give you a competitive edge.

4. Conduct a compliance review

Consulting with trade experts or legal advisors is a vital step in navigating the complexities of the new tariffs and exclusions. The accuracy of your tariff classification may be more important than ever for Section 301 tariffs. Whether it's to claim an exclusion or ensure the correct duty rate is applied to your goods, a review of your product classifications for accuracy can help you stay ahead of the curve.

A final takeaway

Regardless of election results, the Section 301 tariffs are here to stay. While many tariff changes are already in effect, it's important to remember some tariffs have a staggered implementation, with tariffs increasing in 2025, and again in 2026. This intentional release schedule gives importers time to adjust supply chains.

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