Not long after the Office of the United States Trade Representative (USTR) launched Section 301 investigations under the Trade Act of 1974 related to what it called structural excess capacity and production in manufacturing sectors earlier this week, beginning with China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India, it subsequently followed up with an announcement indicating it has added another 60 countries to its Section 301 investigations list.
The impetus for these additional investigations, according to USTR, is to determine whether acts, policies, and practices of each of these economies related to the failure to impose and effectively enforce a ban on the importation of goods produced with forced labor are unreasonable or discriminatory and burden or restrict U.S. commerce.
“Despite the international consensus against forced labor, governments have failed to impose and effectively enforce measures banning goods produced with forced labor from entering their markets. For too long, American workers and firms have been forced to compete against foreign producers who may have an artificial cost advantage gained from the scourge of forced labor,” said USTR Ambassador Jamieson Greer. “These investigations will determine whether foreign governments have taken sufficient steps to prohibit the importation of goods produced with forced labor and how the failure to eradicate these abhorrent practices impacts U.S. workers and businesses.”
As previously reported, last month, the United States Supreme Court ruled against the legality of the Trump administration’s implementation of tariffs under International Economic Emergency Protection Act (IEEPA), the White House did not hesitate to move forward with a 10% Section 122 tariff in its place, for a 150-day period, set to expire in late July, for what it describes as serious international payment imbalance and a growing U.S. balance-of-payments deficit, as well as pushing for increased domestic manufacturing, and stemming the flow of fentanyl across U.S. borders from Canada and Mexico.
In what could be seen as a challenge for shippers, Pete Mento, Director, Global Trade Management Services, Baker Tilly, told LM that Section 301 tariffs, which focus on unfair trade practices, are extremely difficult for companies to challenge in court.
Industry stakeholders have not seen the full force of the Section 301 tariffs, noted Mento.
“It seems like forever ago, but it was really only a year ago that the United States was dealing with the misery of suddenly being watched so closely with regards to forced labor and slave labor, and we really took a stand,” he said. “And we did that in an international community to do so. That information that they were gathering on 301s only strengthens the claim that could be used by the government. Slave labor, forced labor, unfair trade practices like currency manipulation, the effective American intellectual property are all things that ultimately can become the basis for the argument by the government to implement those 301, tariffs. And I believe that they will, again, making it very hard to do those in court. I think they make a good base case for why they should have them in place.”
In a LinkedIn post, Mento said that if the USTR’s Section 301 investigation concludes that the industrial policies for the countries being looked into are unreasonable or distort trade, the U.S. can subsequently respond with tariffs.
That process, he said, would include the following steps: investigation, public comments, hearings, findings, and new duties (tariffs).
As for next steps, the Office of the USTR a hearing for these investigations will be held on April 28, with written comments due by April 15.
Chris Rogers, Head of Supply Chain Research, at S&P Global Market Intelligence, wrote in a research note that the overall economic impacts of trade policy, following the Supreme Court ruling, may be limited, in that the IEEPA duty rates are likely to be replaced with other programs with functionally similar rates.
“The global economy at large has proven to be resilient to tariffs so far and faces bigger challenges from uncertainty regarding conflict in the Middle East and the impact on oil prices,” noted Rogers.
