Electrical Manufacturers Encourage Collaboration and Offer Recommendations on USTR’s Proposed Changes to Section 301 Tariff Regime

July 02, 2024

NEMA Urges a Balanced Approach to Secure Domestic Manufacturing Supply Chains and Maintain Competitiveness

Arlington, Va.- In response to the U.S. Trade Representative's (USTR) request for comments on its Section 301 Proposed Modifications and Exclusion Process, NEMA welcomed the Administration's efforts to address China's acts, policies, and practices of concern and submitted comments intended to support the Administration's goals while balancing the realities of global electrical supply chains.

NEMA members are leading the transition to an all-electric future. Since 2021, the U.S. electroindustry has invested more than $12 billion to increase production of clean energy-focused electrical goods in the United States. As a result, U.S. imports of electroindustry goods

from China decreased by 6.7 percent from 2018 to 2023, and China's share of U.S. electroindustry imports decreased from 28.2 percent in 2018 to 17.9 percent in 2023.

However, U.S. electrical manufacturers have one of the most complex international supply chains of any industry, and complex global supply chains must work in harmony with domestic production constraints. We encourage USTR not to take a one-size-fits-all approach to tariff policy that may impact manufacturers' ability to compete. USTR's proposal to increase Section 301 tariffs on $20.5 billion of imported manufactured goods from China will disproportionately impact the electroindustry, as electroindustry goods account for 71.3% of the higher Section 301 tariffs.

Furthermore, USTR's withdrawal of tariff exclusions on 26 electrical products will raise assessed duties on the electroindustry by an additional $1.6 billion annually. While NEMA applauds the introduction of a new product-specific exclusion process, we are concerned with USTR's exclusive focus on non-electrical goods without broadly considering electrical goods. We believe that USTR's exclusion process should consider all goods, including electrical machinery, equipment, and parts, that support the production of clean energy and advanced technology goods in the United States.

"Electrical manufacturers are working hard to strengthen U.S. manufacturing of critical clean energy goods by reshoring, new-shoring, near-shoring, and friend-shoring critical supply chains," said NEMA President and CEO Debra Phillips. "We share the Administration's goal to enforce compliance on international trade, and we encourage USTR and the Administration to review our recommendations and consider the impacts of Section 301 tariffs on competitiveness and the energy transition, particularly as they relate to products that cannot be sourced elsewhere."

NEMA's recommendations to USTR include expanding the tariff exclusion process to include electrical goods, asking for an appeal and rectification process for non-extended tariff exclusions, publishing a consolidated list of Section 301 tariff lines, initiating an independent investigation of the economy-wide impacts of the Section 301 tariff regime, and asking the President and Congress to consider additional incentives to stimulate investments and production of stationary (non-electric vehicle) lithium-ion batteries in the United States. NEMA also is recommending that Section 301 tariff rate increases be based on empirical data, market realities, and alignment with changing government policies and priorities. NEMA's full comments can be found here.

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