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The Future of Section 301 Tariffs and Decarbonization
In an effort to decarbonize energy-intensive industries the Biden-Harris administration has announced up to $6 billion for projects supporting this initiative. The “Investing in America Agenda” will be funded via the Bipartisan Infrastructure Law and Inflation Reduction Act. These projects aim to accelerate emerging technologies crucial to meet climate and domestic manufacturing goals.
Though a variety of industries are at the forefront of CO2 emissions, none are more prevalent than steel and aluminum production. As American companies look towards a greener future, countries like China continue to produce without emission concerns. That coupled with heavy government subsidies means China has artificially low-priced steel and aluminum products that undercut American made production. This creates an unfair market for domestic companies that simply cannot compete with China’s over-capacity.
This industry is further complicated by the proposed merger of United States Steel Corporation and Japanese owned Nippon Steel, the world’s third largest producer of steel, later this year. Supporters suggest the merge would facilitate a team effort in combating China’s steel and aluminum global domination. Pushback on the $14.1 billion acquisition stems from uncertainties on homeland security, intellectual property transfer and potential job loss.
In addition to decarbonization and economic imbalances, Section 301 tariff rates seek to alleviate anti-competitive practices not only in the Steel and Aluminum industry, but others, too. Through the United States Trade Representative investigation, USTR Ambassador Tai has advised rate increases on several Chinese products. Certain steel and aluminum products will go from a 7.5% rate to 25% by years end. Tariff rate increases to 25% are also in the works for electric vehicle related battery parts, critical minerals such as graphite, ship to shore cranes, facemasks, and medical gloves. Syringes, needles, and solar cells will go up to a 50% rate. Finally, all electric vehicles from China will have a 100% tariff. The finalized report also recommends a list of exclusions for machinery involving solar panel manufacturing equipment. President Biden also plans to address the circumnavigation of these tariffs through Mexico, where countries like China avoid additional duty rates. Ambassador Tai views these plans as an on-going effort to enforce protection and diversification of American supply chains.
The complexity of U.S. trade agreements, tariffs and supply chains are perpetually evolving. Allyn International has the resources to ensure what it takes to enable your company to be as competitive as possible. Our in-depth global trade compliance services operate off integrity and current up to date knowledge to best serve your needs. If you are looking for knowledgeable, experienced compliance service providers, look not further than Allyn International; reach out to us at sales@allynintl.com.
Contributor: Zachary Woods
About Allyn International
Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North America, Europe and Asia and Allyn regional headquarters are strategically located in Fort Myers FL USA, Shanghai P.R. CHINA and Prague, CZECH REPUBLIC. For more information, go to www.allynintl.com.
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