On November 1, 2022, the United States Trade Representative (“USTR”) released the questionnaire it is requesting interested parties to submit for its consideration related to the economic impact of the Section 301 tariffs. The portal to submit responses to the questionnaire will open on November 15, 2022, and will remain open until January 17, 2023. The questionnaire has multiple pages of questions and similar to the comments it solicited in 2018, USTR is including specific sections which will permit parties to comment on and address concerns related to specific HTSUS codes.
Parties who wish to articulate specific concerns related to HTSUS subheadings, are required to further explain whether the Section 301 duties on that individual HTSUS subheading led to changes in domestic manufacturing of either the product or goods that the entity used as an input. The questionnaire also requires commenters to discuss the effects “including in terms of capital investments, capacity and production levels, industry concentration, and profits? Have additional duties on goods covered by this tariff code impacted U.S. workers, including with respect to the level of employment and wages?”
One of the more interesting questions relates to whether or not the tariffs on inputs are such that the downstream product or finished good suffers a “tariff inversion,” i.e. that tariffs make it cheaper to buy a Chinese finished product than to make the finished product in the United States with the higher tariffs for that product, making the economy-wide impact off the Section 301 tariffs potentially counter-productive. USTR further requests information on how effective the tariffs have been on altering or modifying Chinese behavior.
Husch Blackwell recommends that all clients whether or not they have filed complaints challenging the Section 301 duties review the questionnaire and discuss next steps with counsel to be able to timely prepare and submit comments that will ultimately affect whether or not Section 301 duties continue on the over $500 billion dollars in goods.