United States: Section 301: Trump Administration Announces Proposed Targets For New Tariffs And Contemplates Investment Restrictions—And China Responds In Kind

What you need to know:

  • The Trump Administration is considering imposing new tariffs of 25 percent on imports from China. Targeted imports include a wide range of products from chemicals and pharmaceuticals to electrical equipment, machinery, vehicles, medical devices and parts and components.
  • The Administration has requested comments on the proposed list of products that will be subject to the tariffs.
  • Comments are due May 11. A public hearing will be held May 15. The final list of products subject to the tariffs will likely be announced in June.
  • China has announced that it will respond if the US imposes unilateral tariffs or trade and investment barriers.


Following an investigation of Chinese trade practices and industrial policy, on March 22, the Trump Administration announced its intention to impose trade penalties on Chinese imports and restrict certain Chinese investment in the United States. On April 3, the Office of the United States Trade Representative (USTR) announced the list of Chinese products it proposes to penalize with 25 percent tariffs. USTR is accepting comments on the proposed list until May 11, 2018, and will hold a public hearing in Washington, DC on May 15, 2018. Following this process, final decisions will be made on what products will be subjected to the additional tariffs, with commentators suggesting tariffs could be imposed in early June.

This investigation was launched under authority granted by Section 301 of the Trade Act of 1974 to investigate foreign trade practices and take action to compel another country to eliminate unfair, unreasonable or discriminatory practices that burden US commerce. At the same time, the Administration also announced and then initiated a WTO dispute challenging China's practices related to the granting of technology licenses to US firms operating in China. In addition, President Trump told the Treasury Department to propose new investment restrictions on China, and asked for a progress report on this issue by late May.

Since the creation of the World Trade Organization (WTO) in 1995, the United States has attempted to address unfair foreign trade practices through WTO dispute settlement, and has not acted unilaterally under Section 301. However, the Trump Administration appears poised to take unilateral action against China by both imposing duties on certain imports and restricting investment activity by Chinese firms in the United States. It is likely that China will challenge the unilateral tariffs as inconsistent with WTO rules. China also has signaled it would take proportionate countermeasures against US interests if the US puts new tariffs on Chinese goods. China recently demonstrated its resolve in this regard by promptly imposing trade restrictions on US exports, in reaction to the steel and aluminum tariffs just imposed by the Trump Administration. The United States' new unilateralism also could engender copycat behavior by other countries.

Tariffs on Imports from China

The White House has announced plans to impose 25 percent tariffs on $50 billion worth of imports from China that are "supported by China's unfair industrial policy." 

On April 3, USTR published a proposed list of products to be targeted by the new import tariffs. Those products fall mainly into the pharmaceutical, medical device, machinery and machine parts, information communications technology (ICT), aerospace, iron/steel and aluminum sectors, although products from a number of other sectors are also hit. A full list of products is provided here.

USTR will be accepting comments on this proposed list until May 11. At the end of the comment period, USTR will hold a hearing and will accept post-hearing submissions, as well. The comments and hearing offer a critical opportunity for companies and other interested parties to provide information about the impacts of the proposed tariffs on the US economy and US jobs, as well as the advisability of targeting particular products or product categories.

These proposed tariffs could have significant impacts on various sectors of the US economy, including retailers, consumer electronics producers, and US-based companies producing components of finished goods targeted for new tariffs, as well as US-based manufacturers relying on imports for key components.

Stakeholders concerned either about particular products included on the proposed list or about ensuring that particular products in a targeted sector remain off the list, should plan to submit formal comments to USTR, as well as communicate with their congressional representatives and executive branch allies. It is important to note that products not currently included on the list could be added to the list later if no opposition is registered. Products that comprise a large segment of US imports and that have international substitutes could be top priorities for inclusion in a final list. Stakeholders in favor of including particular products likewise should express their views. Companies and organizations with views more broadly on the economic or policy impacts of imposing unilateral tariffs under Section 301 also should consider expressing those views.

New Restrictions on Chinese Investment in the United States

As part of the Section 301 action, the Administration also announced its intention to create new rules that limit Chinese investment in, or acquisition of, sensitive US companies or technology. President Trump directed the Treasury Department to explore options for new investment restrictions using "any available statutory authority." Thus, while any new restrictions must be grounded in existing statutory authority, Treasury is likely to be able to rely on a range of laws and regulations to develop a proposal. In addition to existing national security authority to review cross-border investment transactions, the Administration might also rely on other authorities, such as export controls and government procurement rules, or even broader powers to act in an international emergency, to create investment limitations. Thus, at this juncture, it is unclear whether the new rules will be limited to restricting Chinese investments with national security implications or if Treasury will propose conditions that implicate a broader spectrum of transactions involving Chinese firms.

The USTR report highlights Chinese acquisitions in seven sectors of the US economy: (1) aviation; (2) integrated circuits; (3) information technology and electronics; (4) biotechnology; (5) industrial machinery and robotics; (6) renewable energy; and (7) automotive. Thus, new investment restrictions could target investment in those sectors. New investment restrictions could conceivably affect relationships between US companies and Chinese investors that take place outside the United States, as well as proposed US investments in China. Companies engaged with Chinese counterparts in investment activities or proposing this kind of engagement will want to watch closely for impacts on their plans.

Retaliation Risk

China has announced its intention to fight back, if the US imposes new trade and investment restrictions and already released a list of US products, including soybeans, automobiles, aircraft and chemicals, that would be targeted for retaliatory tariffs. China's ambassador has said that China does not seek a trade war, but will protect China's interests if the US starts one, and Chinese social media are already teeing up the possibility of an American product boycott. China has also announced retaliation for the steel and aluminum tariffs the United States recently imposed pursuant to a national security investigation under Section 232 of the Trade Expansion Act of 1962. Those retaliatory tariffs include pork products, various tree nuts, wine, fresh and dried fruits, stainless steel pipes and tubes, and aluminum scrap.

If the US imposes investment restrictions, China is likely to take action in kind, potentially limiting US investments and acquisitions in China, or imposing additional limitations, formal or informal, on existing US investments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions