US investigates Section 301, risk of 30% tax on Chinese goods

USTR opens Section 301 investigation October 24, alleging China is not complying with Phase One 2020 Agreement; comments October 31–December 1, hearing December 16, increased tax risk.

The Office of the United States Trade Representative (USTR) on October 24 initiated an investigation under Section 301 of the Trade Act of 1974 regarding China's compliance with the Phase One Economic and Trade Agreement signed in 2020. The move opens up tax policy risks for Chinese goods, in the context of the tax rate under the International Emergency Economic Powers Act (IEEPA) currently around 30% being debated by the US Supreme Court on November 5.

US President Donald Trump and Chinese President Xi Jinping in Japan in 2019. Photo: Reuters

Events and Timeframe

The USTR said it will begin accepting public comments from October 31 to December 1 and hold a public hearing on December 16 to gather comments. The investigation targets “unfair trade practices” as China “appears to have failed” to comply with its commitments under the 2020 agreement.

Jamieson Greer, USTR representative, said the initiation of the investigation was intended to “demonstrate the Trump administration’s determination to hold China to its commitments in the Phase One Agreement, protect American farmers, ranchers, workers and innovators, and establish a more balanced trade relationship.”

Main causes and arguments

According to USTR, China has failed to meet its commitments to purchase additional US goods and services in the agreement, including agricultural, industrial, energy and services products with an increase of $200 billion per year for at least two years from 2020. The agency also said that reform commitments on intellectual property protection, technology transfer, agriculture and financial services have not been fully implemented.

China has objected, calling the US allegations and investigation measures “false.” A spokesperson for the Chinese Embassy in Washington asserted that Beijing “has seriously fulfilled its obligations” under the Phase One Agreement, stressing that its actions have benefited global investors, including the US.

Compare history and tax context

The Phase One deal was signed during President Donald Trump’s first term, amid US tariffs on Chinese imports. Currently, IEEPA tariffs on Chinese goods are around 30%, and the US Supreme Court will hear arguments on the related case on November 5.

USTR said the new investigation could provide a legal basis to increase import tariffs from China, in the event the Supreme Court overturns the tariffs under IEEPA.

Short and medium term prospects

• Short-term: From October 31 to December 1, USTR collects comments and prepares for a public hearing on December 16. Markets watch legal developments at the Supreme Court on November 5 regarding the IEEPA tax of about 30%.
• Medium-term: If IEEPA is rescinded, the Section 301 investigation is likely to become the legal basis for further tariff actions against Chinese goods, according to USTR.

Impact on industry and supply chain

The 2020 agreement focuses on agriculture, industry, energy and services, so any changes to tariff policies could directly impact these groups of goods in the US-China trade relationship. USTR emphasized the goal of protecting American farmers, ranchers, workers and innovators.

China's response shows Beijing's opposition to escalating economic measures, while asserting that its activities benefit global investors, including the US.

Timeline and key parameters

Mold	Content
October 24	USTR Announces Initiation of Section 301 Investigation
October 31–December 1	Get public feedback
December 16	Public hearing
November 5	US Supreme Court hears debate on IEEPA tariffs on Chinese goods
Current tax	About 30% under IEEPA for Chinese goods

Note: USTR has not announced new tariffs; next steps depend on the results of the Section 301 investigation and the Supreme Court's ruling.

Source: https://baolamdong.vn/my-dieu-tra-muc-301-nguy-co-thue-30-hang-trung-quoc-397663.html