Tariff Times Daily: USTR Drives Forward China Investigation
Amidst rising tensions between the United States and China, President Trump stands firm in protecting American labor and American workers.
THE BOTTOM LINE
As the Trump-Xi meeting approaches, the entire world is holding their breath to see what happens. The war in Iran, as well as the looming threat over Taiwan are strong influences over the administrations calculus on how to approach trade negotiations with China. On the one hand, export controls, particularly on high end chips, are working. The United States is driving ahead on AI and Compute while China gets further behind. With this in mind, the Chinese are more desperate to throw their critical mineral processing leverage in trade negotiations, and the Peoples Liberation Army Navy (PLAN) is taking an increasingly hostile position around Taiwan. A normal President would crack under this pressure, and give the Chinese a sweetheart deal to avoid conflict. Not President Trump. The administration moved forward today opening a review of the original Section 301 tariffs with China. Deputy USTR Rick Switzer has stated the admin will take a “patient but strong” approach. Meanwhile, more wins are pouring in, as the United States hit records in good exports in March and Norway is joining the Pax-Silica Coalition to build out a supply chain in critical minerals that is not dependent on Chinese processing.
TODAY’S STORIES
USTR Opens Statutory Second Four-Year Review of Section 301 China Tariffs
USTR published the Federal Register notice initiating the second four-year review of the Section 301 tariffs imposed on China in 2018, beginning with notification to the domestic industries that benefit from the actions. The review is the legal mechanism through which the existing tariff structure can be expanded, modified, or maintained, and it provides protected industries a formal channel to make the case for continuation and broadening. Comments are open through August 22.
Federal Register — Office of the U.S. Trade Representative
Hassett: Record March Goods Exports and Capital Goods Imports Show Onshoring Working
NEC Director Kevin Hassett, speaking at the Commerce Department on Tuesday, said the March trade report’s record $320.9 billion in monthly goods exports and the rise in capital goods imports demonstrate the administration’s economic program is producing the intended results. Hassett’s framing matters: the headline trade deficit widened, but the composition of that gap is increasingly capital goods that build domestic productive capacity. That is the American System case for measuring trade outcomes by what gets built at home, not by the topline balance.
White House Releases Most-Favored-Nation Drug Pricing Framework, Reaches Agreements With 17 Manufacturers
The White House released its Most-Favored-Nation drug pricing analysis, reporting voluntary MFN agreements with 17 of the largest global pharmaceutical manufacturers. The policy ties U.S. drug prices to those paid in other developed economies, addressing the long-standing pattern in which American consumers and the federal health programs subsidize pharmaceutical innovation that benefits the world. For the domestic pharmaceutical supply chain, the next question is how MFN pricing pairs with the administration’s parallel push to reshore active pharmaceutical ingredient production.
Norway Joins Pax Silica, Bringing U.S.-Led Coalition to 14 Members
Norwegian Trade and Industry Minister Cecile Myrseth announced that Norway will sign the Pax Silica declaration on Wednesday, becoming the fourteenth member of the U.S.-led coalition focused on artificial intelligence, semiconductors, and adjacent supply chains. The expansion of allied membership gives the administration a broader bench of partners with whom to coordinate critical mineral access and processing capacity outside Chinese-dominated channels. Each new accession adds a node to the alternative supply architecture being built in parallel to the bilateral pressure on Beijing.
CPA: America’s AI Boom Has a Trade Policy Blind Spot
The Coalition for a Prosperous America argues that the AI infrastructure buildout, including the data centers, chips, and grid investment driving record industrial demand, is occurring without an adequate trade policy framework to ensure the underlying components and inputs are domestically produced. CPA’s point is that the AI race is being treated as a technology question when it is, structurally, a manufacturing and supply chain question. The administration’s emerging Section 232 work on semiconductors and the Pax Silica coalition begin to address this, but CPA’s framing is that the trade policy architecture is still catching up to the industrial reality.
Coalition for a Prosperous America
FEDERAL REGISTER WATCH
Notice — ITC Institution: International Trade Commission instituted preliminary phase AD/CVD investigations on air compressors from China, Malaysia, and Vietnam. A multi-country case on a workhorse industrial input is exactly where a Section 232-style sectoral approach could supplement the trade remedy track. Read notice
Notice — Commerce Initiation: Commerce initiated less-than-fair-value investigations on polytetramethylene ether glycol from China, Korea, Taiwan, and Vietnam. PTMEG is a foundational chemical input for spandex, polyurethane elastomers, and engineered fibers, and the four-country scope reflects how thoroughly the supply base has been hollowed out. Read notice
Notice — Commerce Preliminary: Commerce issued an affirmative preliminary LTFV determination on freight rail couplers from India and a parallel determination on couplers from the Czech Republic. The freight rail equipment supply chain is a defense-industrial-base concern, and these cases stand to support the small remaining domestic producer base. India notice | Czech Republic notice
Notice — Commerce Sunset Review: Commerce found revocation of the AD and CVD orders on wood mouldings and millwork products from China would likely lead to recurrence of dumping and subsidization. The orders will continue, preserving protection for an industry that competes directly against state-supported Chinese capacity. AD review | CVD review
ON THE DOCKET
USTR’s new Section 301 four-year review opens a 108-day comment window that will sit on top of the AGOA modernization filings closing next week.
May 15 (closes in 9 days) — USTR: AGOA modernization, ahead of the program’s December expiration. Domestic textile, apparel, and agricultural producers should weigh in on rules of origin, eligibility criteria, and which provisions, if any, are compatible with the broader bilateral and reciprocal trade agenda. Read notice
May 26 (closes in 20 days) — Commerce: Subsidy programs by countries exporting softwood lumber to the United States, covering July through December 2025 under the Softwood Lumber Act. The U.S. lumber industry’s central forum for documenting Canadian and other foreign stumpage subsidies. Read notice
Aug 22 (new, closes in 108 days) — USTR: Second four-year statutory review of Section 301 China actions from 2018. Domestic industries that benefit from the original tariff structure should file early to make the case for continuation, expansion, or modification of specific tariff lines. Read notice
ON THE HILL
HEARINGS & MARKUPS
No public hearings or markups scheduled in House Ways and Means or Senate Finance this week.
BILLS TO WATCH
S 4327: Securing America’s Drug Supply from Communist China Act. Aimed at the same pharmaceutical supply chain vulnerability CPA flagged on antibiotics last week, the bill creates a framework for moving production out of Chinese sourcing. Referred to Senate HELP. View bill
S 4393: Build America, Buy America Compliance Act. Tightens the BABA enforcement regime that governs the domestic content rules attached to federal infrastructure spending, closing waivers and reporting gaps that have allowed foreign content into Buy American projects. Referred to Senate Homeland Security and Governmental Affairs. View bill
HR 8649: Expanding the Defense Industrial Base Sales Act. Broadens the channels through which allied governments can procure from U.S. defense manufacturers, supporting volume and scale at domestic primes and their supplier base. Referred to House Foreign Affairs. View bill
HR 8656: DOJ ballistic-resistant body armor must be manufactured using domestic ballistic fibers. A targeted onshoring requirement that addresses a specific defense-industrial vulnerability in the synthetic fiber supply chain. Referred to House Judiciary. View bill
SRES 713: Senate resolution supporting the dollar as the world’s reserve currency and combating PRC economic influence. Symbolic but substantively useful as a marker of bipartisan Senate posture as the Trump-Xi summit approaches. Referred to Senate Foreign Relations. View bill
COMMITTEE STATEMENTS
No new House Ways and Means trade statements in the last 72 hours.
TODAY IN AMERICAN HISTORY
On May 6, 1935, President Franklin Roosevelt signed Executive Order 7034 establishing the Works Progress Administration, which over the next eight years built more than 650,000 miles of roads, 78,000 bridges, and 125,000 public buildings. While FDR’s legacy is controversial, with his Secretary of State Cordell Hull gutting American tariffs, FDR’s build out of public infrastructure and deployment of millions of Americans into important public service work with the WPA and the Civilian Conservation Corps is something worth reflecting on.