Over the past week there has been a flurry of new U.S. trade actions that have or may impose new or increased tariffs on certain imports of Chinese merchandise and solar products. These actions are pursuant to the Biden Administration’s authority under Sections 201 and 301 of the Trade Act of 1974 and under the laws and regulations which allow for the imposition of antidumping and countervailing duties (“AD/CVD”) to address so-called unfair trade practices. This alert summarizes these new actions, potential effects of each, and next steps.
Section 201
On May 16, 2024, the Biden Administration announced changes to safeguard duties under Section 201 currently in effect on certain solar product imports from numerous countries.
Section 201 duties on certain solar product imports have been in effect since 2018. The current applicable rate for covered merchandise is 14.25%, and applies to any covered merchandise that is in excess of the 5 gigawatt annual tariff-rate quota.
One of the new changes announced is an expansion of merchandise covered by the Section 201 duties. Imports of crystalline solar photovoltaic (“CSPV”) bifacial modules are currently exempt. Pursuant to this new action, the exemption will soon be rescinded and such modules will be subject to the Section 201 duties. Once the exclusion is rescinded, importers with pre-existing contracts for bifacial modules to be delivered within 90 days of the rescission will be able to submit a certification and such modules will remain free of Section 201 duty liability.
Another potential change is an increase to the tariff-rate quota threshold. The Biden Administration noted that it will monitor the current quota to determine whether it should be increased from 5 gigawatts to 7.5 gigawatts “to ensure domestic module manufacturing continues to grow while manufacturers scale production throughout the supply chain.”
Concurrent with these Section 201 announcements, the Biden Administration also announced tax credit guidance for clean energy products and grants for solar supply chain technology development. The Administration also confirmed the end of the moratorium on AD/CVD duty liabilities on certain CSPV cells and modules from Cambodia, Malaysia, Thailand, and Vietnam, and a certification mechanism to assist in the enforcement of any applicable duties.
The announcement that lays out these measures is available here.
Section 301
On May 20, 2024, the Biden Administration published a memorandum on its proposal to increase or impose new Section 301 tariffs on imports from China. The announcement comes on the heels of a four-year review of the Section 301 tariffs first imposed in 2018 by the Office of the U.S. Trade Representative (“USTR”), which began in 2022. The Section 301 tariffs currently cover a wide array of merchandise imported from China. The published memorandum is available here; the Administration’s related May 14, 2024 announcement is available here,; and USTR’s report is available here.
USTR concluded in its report that while Section 301 tariffs have provided American businesses relief, it urged the Biden Administration to take further actions to prevent forced technology transfers and intellectual property theft. In response, President Biden directed USTR to impose these new and increased tariffs targeting strategic sectors, namely, the energy, health care, and infrastructure industries.
The tariff modifications, which will cover $18 billion in imports, and are expected as follows:
| Product | Current Rate | New Rate | Effective Date |
| Battery parts (non-lithium-ion batteries) | 7.5% | 25% | 2024 |
| Lithium-ion electrical vehicle batteries | 7.5% | 25% | 2024 |
| Lithium-ion non-electrical vehicle batteries | 7.5% | 25% | 2026 |
| Natural graphite | 0% | 25% | 2026 |
| Certain critical minerals | 0% | 25% | 2024 |
| Permanent magnets | 0% | 25% | 2024 |
| Electric vehicles | 25% | 100% | 2024 |
| Facemasks | 0-7.5% | 25% | 2024 |
| Medical gloves | 7.5% | 25% | 2026 |
| Syringes and needles | 0% | 50% | 2024 |
| Semiconductors | 25% | 50% | 2025 |
| Ship to shore cranes | 0% | 25% | 2024 |
| Solar cells (whether or not assembled into modules) | 25% | 50% | 2024 |
| Steel and aluminum products | 0-7.5% | 25% | 2024 |
The Administration directed USTR to maintain other Section 301 tariffs still in place. USTR is expected to publish a proposed list of products and corresponding tariff increases in the near future. The public will be invited to provide feedback during a notice and comment period before the tariffs are finalized. We will publish more details about that opportunity to participate when it becomes available.
In addition to the proposed tariff modifications, the Administration also announced a new tariff exclusion process to be undertaken by USTR. American businesses will be able to request relief from the Section 301 tariffs on certain machinery used in domestic manufacturing classified under chapters 84 and 85 of the Harmonized Tariff Schedule of the United States. Chapter 84 covers nuclear reactors, boilers, and mechanical appliances, and Chapter 85 covers electrical machinery, sound recorders, and reproducers. USTR will prioritize temporary exclusions for solar manufacturing equipment. A forthcoming notice will detail the machinery exclusion process and provide instructions on how to submit exclusion requests and oppose such requests. We will also publish more details about this opportunity to participate.
Solar III AD/CVD Investigations
On May 20, 2024, the U.S. Department of Commerce (“Commerce”) initiated AD/CVD investigations on imports of certain CSPV cells, whether or not assembled into modules, from Cambodia, Malaysia, Thailand, and Vietnam (the “Solar III AD/CVD Investigations”). The published notices of initiation are available here (AD) and here (CVD). The initiation of these investigations marks the third set of AD/CVD investigations of such merchandise, with the first AD/CVD orders dating back to 2012 and covering CSPV cells from China (the “Solar 1 AD/CVD Orders”). The Solar III AD/CVD Investigations are also a follow-on to the recently concluded circumvention inquiry determinations by Commerce, in which it concluded that certain CSPV cells from Cambodia, Malaysia, Thailand, and Vietnam were circumventing and therefore should be subject to the Solar 1 AD/CVD Orders.
As a result of these new Solar III AD/CVD Investigations, certain CSPV cells could be subject to duty liabilities of over 125% for items from Cambodia, over 80% for items from Malaysia, over 70% for items from Thailand, and over 270% for items from Vietnam.
Commerce has now invited interested parties to submit comments on the scope of these investigations, with such comments currently due by June 3, 2024. Commerce has also requested that certain exporters and producers submit information with respect to the quantity and value of their recent exports to the United States. The current deadline for these submissions is June 4, 2024.
Next Steps
Baker & McKenzie LLP advises clients across the world on complex, international trade issues. If you are interested in participating in or need assistance with any of the above-cited proceedings, we stand ready to assist. Please reach out to Christine Streatfeild, Justin Becker, Elizabeth Mullin or the Baker McKenzie partner with whom you usually work for more information.
