“No American President in modern history has recognized the wide-ranging and harmful foreign trade barriers American exporters face more than President Trump,” said Ambassador Greer. “Under his leadership, this administration is working diligently to address these unfair and non-reciprocal practices, helping restore fairness and put hardworking American businesses and workers first in the global market.”

The findings of the 2025 NTE underscore President Trump’s America First Trade Policy and the President’s 2025 Trade Policy Agenda.

The NTE is an annual report due to the President and Congress by March 31 of each year. USTR works closely with other government agencies and U.S. embassies and solicits comments from the public through a Federal Register Notice to prepare the NTE.

The annual report is submitted in accordance with Section 181 of the Trade Act of 1974, as added by Section 303 of the Trade and Tariff Act of 1984 and amended by Section 1304 of the Omnibus Trade and Competitiveness Act of 1988, Section 311 of the Uruguay Round Trade Agreements Act, and Section 1202 of the Internet Tax Freedom Act.

To read the 2025 National Trade Estimate as it was posted by the Office of the United States Trade Representative click here.

To read the PDF as it was published by the Office of the United States Trade Representative click here.

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The United States of America is the most extraordinary nation the world has ever known. From the very beginning, and even more so as it unfolded across the entire continent, the United States was populated with people of immense talent, drive, and grit. In the previous century it saved the entire world, dispatching three rounds of adversaries by winning two world wars and defeating Communism. It put an American on the moon.

The United States accomplished those feats because it was a tremendous industrial power fueled by innovation and blessed with abundant agricultural and energy resources. Indeed, the very success of the American way of life—its freedom and its prosperity—is supported by two things: a robust middle class earning high wages and a strong national defense. These are, in turn, created by a combination of innovation that fuels productivity growth, domestic work and investment in industry, and the day-to-day choices of individual Americans.

Today, the upward mobility offered by the manufacturing sector is not widely available to the working class, much of our industrial might has moved overseas, and innovation has begun to follow. Manufacturing jobs in the United States declined from 17 million in 1993 to 12 million in 2016.1 Over 100,000 factories closed between 1997 and 2016. 2,3 And the U.S. goods trade deficit has soared to over a trillion dollars.4 These trends are the product of a withering, decades-long assault by globalist elites who have pursued policies—including trade policies—with the aim of enriching themselves at the expense of the working people of the United States. As a result, the middle class has atrophied, and our national security is at the mercy of fragile international supply chains.

President Trump alone recognized the role that trade policy has played in creating these challenges and how trade policy can fix them. Since he first took the oath of office in 2017, President Trump has reshaped the trade policy landscape to prioritize the national interest. He has built a new consensus that tariffs are a legitimate tool of public policy. He has demonstrated the imperative for tough trade enforcement against countries who think they can take advantage of the United States and get away with it. He has shown that the United States has leverage and can negotiate aggressively to open markets for Made in America exports, particularly for agricultural exports. He has proven that a robust and realist trade policy can create jobs, promote innovation, strengthen the national defense, raise wages, support farmers, and foster the manufacturing renaissance that many elites long thought was impossible for the United States to achieve.

Toward a Production Economy

To reach these objectives, the United States must have an economy focused on production. For much of our history, the American way of life was defined by creating, inventing, building, growing, and producing. Americans are more than just what they consume. And the United States is more than an economy that merely moves money around—it is a nation of intertwined communities, oriented around the production of manufactured goods, agricultural products, services, and knowledge. Ensuring that trade policy favors a Production Economy will help the President Make America Great Again.

Why? It’s simple:

A Production Economy is a high-wage economy. Manufacturing jobs have a wage premium of roughly 10 percent. However, as the United States deindustrialized, that wage premium declined for manufacturing workers in core production jobs. Using trade policy to increase the number of manufacturing jobs in our country – and the share of manufacturing contributing to gross domestic product – will help raise wages and return our country to one with a more vibrant and secure middle class.

A Production Economy creates jobs for all. Trade policy does not need to pit workers or sectors against each other. This is because manufacturing is a sector known for positive spillovers, including in the service sector, that benefit the economy overall. One study found that for every additional manufacturing job created in a community, 1.6 jobs were created in other sectors.6 And agriculture-related jobs—work that produces the sustenance vital for human life—comprise about 10.4 percent of total U.S. employment.

A Production Economy is a boon for innovation. Between 2003 and 2017, research and development (R&D) expenditures in China by U.S. multinationals grew at an average rate of 13.6 percent per year, while R&D investment by U.S. multinationals in the United States grew by an average of just 5 percent per year. Deploying trade policy tools to create incentives to reshore manufacturing will reverse this troubling trend and promote U.S. technological dominance.

A Production Economy is a vital component of our national defense. The United States was able to win World War II because of our industrial might, but our manufacturing base has atrophied. Although the United States produced less than 14,000 aircraft in the two decades prior to World War II, it produced 96,000 planes annually by 1944.9 By comparison, today the United States can only produce each month about a third of the 360,000 artillery rounds the military says it needs to deter our adversaries. Trade policy can help strengthen our defense industrial base.

Changing this alarming trajectory requires a trade policy that is strategically coordinated to achieve three things: an increase in the manufacturing sector’s share of gross domestic product; an increase in real median household income; and a decrease in the size of the trade in goods deficit.

An America First Trade Policy

On January 20, 2025, President Trump signed the Presidential Memorandum “America First Trade Policy” laying out a plan to accomplish the transformational change necessary to reverse our country’s economic decline. The Presidential Memorandum instructs USTR and other agencies to undertake rapid, unprecedented work to put America First on trade.

Right away, the Presidential Memorandum strikes at the threat posed by the trade deficit by directing USTR and other agencies to “investigate the causes of our country’s large and persistent annual trade deficits in goods, as well as the economic and national security implications and risks resulting from such deficits.” By reversing the flow of American wealth to foreign countries in the form of the trade deficit, the United States can reclaim its technological, economic, and military edge.

The Presidential Memorandum further instructs the USTR to review our country’s economic relationship with all nations in order to identify their unfair trade practices, including where trading partners engage in non-reciprocal trade with the United States. By identifying, and acting against, such unfair and non-reciprocal practices, the United States can use its leverage to open new markets for U.S. exports and re-shore the production that has been lost.

USTR has been empowered to chart a new course for any trade agreements to ensure they help raise wages and grow our industrial base. USTR will review existing trade agreements to guarantee that those agreements operate in the national interest. For instance, third countries should not be permitted to free ride on our trade agreements with other trading partners. Alongside this review, USTR will commence the statutorily required public consultation process of the United States-Mexico-Canada Agreement (USMCA) in order to “assess the impact of the USMCA on American workers, farmers, ranchers, service providers, and other businesses” in preparation for the mandated review of the agreement in July 2026. USTR will also identify opportunities for bilateral or sector-specific plurilateral agreements that might be negotiated to open new market access for U.S. exports and reorient the trading system to promote U.S. competitiveness.

The Presidential Memorandum also addresses U.S. trade relations with the People’s Republic of China, the single biggest source of our country’s large and persistent trade deficit and a unique economic challenge. In his first term, President Trump negotiated a historic and enforceable Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China (also known as the Phase One Agreement). However, there has been no action taken to enforce the agreement where China has not lived up to its commitments. USTR will assess China’s compliance with the Phase One Agreement.

The Phase One Agreement grew out of USTR’s investigation under Section 301 of the Trade Act of 1974 into China’s acts policies, and practices related to technology transfer, intellectual property (IP), and innovation. Yet, technology and IP-intensive sectors are hardly the only ones that are threatened by China’s non-market behavior. USTR will look broadly at the bilateral relationship to identify, and respond to, additional unfair practices.

President Trump’s interest in addressing challenges in the relationship with China complements significant interest by the U.S. Congress on the topic. Pursuant to the Presidential Memorandum, USTR will assess the recent legislative proposals related to China’s Permanent Normal Trade Relation (PNTR) status and “make recommendations regarding any proposed changes to such legislative proposals.”

Taken together, these workstreams signal a national commitment to continuing the America First approach to trade developed in President Trump’s first term of office. By taking a strategic, yet vigorous, approach, the United States can finally address the structural challenges distorting the global trading system in ways that undermine U.S. competitiveness and course-correct for the short-sighted trade policy mistakes of the past.

Building on Past Success

To summarize: over the last several decades, the United States gave away its leverage by allowing free access to its valuable market without obtaining fair treatment in return. This cost our country an important share of its industrial base and thereby its middle class and national security. Although many sectors benefitted from trade, it was at too high a price—for example, despite its comparative advantage in agricultural production, the United States has even incurred a worrying trade deficit in agriculture over the past two years.

Going forward, the United States will take action to create the leverage needed to rebalance our trading relations and to re-shore production, including, but not limited to, through the use of tariffs. This will raise wages and promote a strong national defense.

Importantly, this America First Trade Policy builds upon President Trump’s accomplishments from his first term.

•  Though promised by Presidents past, but never accomplished until his first Administration, President Trump successfully renegotiated NAFTA. Its replacement, the USMCA, contains historic provisions to re-shore manufacturing (especially in the auto sector, which had been decimated by NAFTA), the strongest labor and environment provisions in any trade agreement, new market access for U.S. agricultural products, and high-standard digital trade rules.
•  Under his leadership, the United States entered into two important agreements with Japan, opening new access for U.S. agricultural products and securing USMCA-style digital trade rules.
•  The United States also engaged extensively at the WTO, calling attention to and defending U.S. rights to take action against non-market policies and practices and reclaiming American sovereignty from unaccountable foreign bureaucrats.
•  The United States responded assertively to China’s unfair trading practices, negotiating the Phase One Agreement to protect U.S. firms against China’s forced technology transfer and IP theft and imposing significant bilateral tariffs at the same time.

These past successes on trade demonstrates the wisdom and efficacy of President Trump’s America First approach.

First, the proof is in the pocketbook: In 2001, the year China joined the WTO, real median household income in the United States (measured in 2023 dollars) was $70,020. In 2016, the comparable figure was $73,520—real median household incomes had grown only 5 percent in sixteen years.11 That’s an annual average growth rate of 0.3 percent. Then, from 2016 to 2019, the last year before the U.S. economy was disrupted by COVID-19, real median household incomes had grown to $78,250—an increase of 10.5 percent over the course of only three years.12 That’s an average annual growth rate of 3.4 percent, over ten times the annual average growth rate that prevailed from 2000 to 2016. By putting America First on trade, President Trump restarted our Production Economy in a single term; something prior Presidents failed to do for a generation. Further proof is in our newfound national security strength resulting from President Trump’s first term. An America First posture, complemented by new investments in our industrial base, showed that the United States is still a superpower. President Trump’s first term peace dividend brought benefits not only to Americans, but also to the rest of the world.

Lastly, one of the most satisfying pieces of evidence for the America First approach is its bipartisan credibility: all of President Trump’s first term trade accomplishments were retained by the next administration and, in some cases, even expanded upon.

President Trump’s ability to deliver for all Americans while forging a new consensus on trade validates his inaugural pledge: the trade challenges facing our country will “be annihilated” because “from this moment on, America’s decline is over.”

To read the complete report as it was published by the United States Trade Representative click here.

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The deadline for submission of comments is March 11, 2025

Comments in response to this notice can be submitted or accessed here or, for alternatives to online submissions, please contact Catherine Gibson, Deputy Assistant USTR for Monitoring and Enforcement at 202.395.5725.

To view the Federal Register Notice, click here.

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Four years ago, the Covid-19 pandemic and attendant disruptions to global trade revealed the terrifying and destructive effects of fragility in our supply chains. These networks of workers and businesses both at home and abroad supplied the U.S. market with goods ranging from semiconductors and medical supplies to many other consumer and industrial goods. Before the pandemic, “just in time” sourcing from “global value chains” was the governing principle, and concern over how or where goods were made and whether their manufacture harbored latent risks and vulnerabilities was not widespread. But faced with sudden shortages, production delays, and price spikes – taking the hardest toll on those with the least – “just in time” has given way to “just in case.”

The architecture of many supply chains, however, had been taking shape for decades. Their fragility had in part been enabled by a trade and investment policy that prioritized short-term cost-efficiency, profit maximization, and shareholder returns. This approach helped shape investors’ and producers’ decision-making processes that, in many cases, fostered geographical concentration, operational complexity, and bottlenecks, which in turn heightened the risk of volatility, harms to competition, and inflationary dynamics – all of which have been felt in the United States and around the world.

The Biden-Harris Administration has forged new approaches to advancing supply chain resilience across the government. Here at the Office of the United States Trade Representative (USTR), this work has been carried out through trade negotiations, enforcement actions, and other policy initiatives. As we have understood existing trade incentives, rules, and biases to form a fundamental part of what led the world to the brink with brittle supply chain networks, we are confident that new and different trade policies and approaches can and must be a part of the solution.

As we navigate new territory, we have sought to use a “building blocks” approach as we craft, in real time, a version of globalization that is organized according to a new set of principles – ones that are more responsive to the needs of people and planet and to the painful lessons we have learned these past few years. Over time, it became clear that in support of this approach, we needed to provide our stakeholders and partners with a dedicated process to share their input and learnings derived from navigating recent unprecedented supply chain disruptions. As it turns out, no one can do trade, much less change the way trade is done, alone.

Accordingly, early last year, my team and I initiated a stakeholder engagement process to formulate and articulate a more holistic approach to promoting supply chain resilience using trade tools and policies. In March 2024, USTR requested public comment through a Federal Register notice. In outlining a new trade policy vision, the notice explained that resilient supply chains provide a range of sourcing options; adapt, rebound, and recover with agility following shocks; uphold labor rights and environmental protections; strengthen the U.S. manufacturing base and workforce; and mitigate risks of price spikes and volatility that contribute to inflationary dynamics. USTR staff heard testimony at four public hearings from 84 witnesses and received nearly 300 written submissions from a wide range of stakeholders, including labor unions and labor rights non-governmental organizations (NGOs), think tanks, environmental NGOs, companies small, medium, and large, and trade associations, as well as foreign governments. 

The enclosed policy paper series “Adapting Trade Policy for Supply Chain Resilience: Responding to Today’s Global Economic Challenges” marks the culmination of this public engagement effort by distilling our progress in strengthening supply chains and outlining new approaches and strategies covering the following topics:

• “Reshaping the Global Trade Paradigm” (Policy Paper No. 1) explores four distinct but complementary dimensions of resilience—sustainability, security, diversity, and transparency—by synthesizing stakeholder views and relevant literature, reviews USTR actions that have advanced supply chain resilience, and builds a conceptual foundation for exploring new tools and approaches.
• “Sustaining Resilient Textile and Apparel Supply Chains” (Policy Paper No. 2) provides an overview of the domestic textile and apparel industries and related U.S. trade agreement provisions, examines the challenges confronting the sector, identifies areas for further discussion and analysis, and presents trade policy approaches to support more resilient textile and apparel supply chains.
• “Harnessing Rules of Origin for Resilience” (Policy Paper No. 3) examines both preferential and non-preferential rules of origin, discusses emerging stakeholder concerns about their vulnerabilities, and outlines new policy approaches and areas for further analysis.
• “Countering Non-Market Policies and Practices to Strengthen Supply Chain Resilience” (Policy Paper No. 4) describes the challenges that non-market policies and practices (NMPPs) present to healthy markets and competition, explains how certain actors use NMPPs to undermine supply chain resilience, and outlines approaches to addressing NMPPs and their effects on supply chains.
• “Improving Data and Analytical Tools to Promote Supply Chain Resilience” (Policy Paper No. 5) highlights recent studies and analyses of supply chain sustainability, security, diversity, and transparency; examines data and analytical challenges in measuring and assessing supply chain resilience; reviews U.S. government supply chain-related data gathering efforts; and outlines new approaches and implications for harnessing existing and new data and analytics resources to address limitations.
• “Strengthening Supply Chain Resilience through Sectoral Trade Agreements” (Policy Paper No. 6) discusses how a new model of formal trade agreements targeting specific sectors or industries, establishing enforceable disciplines, and encompassing like-minded partners across the supply chain could provide a broad and meaningful framework for achieving the principles and objectives of supply chain resilience.

Of course, much more remains to be done to realize the goal of improving supply chain resilience. Each policy paper outlines new policy tools and approaches that merit further study and collaboration between USTR and interagency partners, stakeholders, Congress, and like-minded trading partners. Beyond the issues taken up in the policy papers, there are opportunities to explore in greater depth how resilience objectives in these next years should inform new trade policy approaches to topics ranging from services and agriculture, to technology and regulation of the digital economy. And finally, new ideas must translate into impact; the hard work of meeting new supply chain challenges with concrete, innovative policy actions and tools will continue.

To advance supply chain resilience, we must and we will traverse new ground in trade and investment policy. The policy papers that follow remind us of where we have traveled, acknowledge the challenges that shape our journey today, and light our path ahead to better serving all Americans for generations to come.

Ambassador Katherine Tai,

United States Trade Representative,

January 2025

To read the series of policy papers as published by the Office of the United States Trade Representative, click here.

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Barriers to U.S. agricultural exports. The NTE Report highlights cross-cutting barriers affecting U.S. agricultural trade, including opaque and burdensome facility registration requirements, such as Indonesia’s facility registration requirements for dairy, meat, and rendered products, and the People’s Republic of China’s (PRC) requirements across a wide range of food and agricultural products; sanitary and phytosanitary (SPS) measures that are not based on science, are maintained without sufficient scientific evidence, or are applied beyond the extent necessary to address SPS issues, such as India and Turkey’s procedures and requirements for agricultural biotechnology approvals, Mexico’s policies regarding products of agricultural biotechnology, and the European Union’s non-science-based policies affecting innovative crop protection technologies; and lack of adherence to science- and risk-based standards and commitments related to trade in poultry products from regions impacted by highly pathogenic avian influenza, including by the PRC. USTR is determined to use all available tools to ensure that U.S. agricultural producers are provided fair access to compete on a level playing field globally, and to ensure safe, wholesome food and agricultural products to consumers worldwide.

Failure to recognize U.S. motor vehicle standards. Certain countries effectively exclude U.S. vehicles built to conform to the U.S. Federal Motor Vehicle Safety Standards (FMVSS). These standards provide a high level of protection that matches or exceeds that of other countries. Over the coming year, USTR will continue its engagement with foreign government and authorities on this issue, to ensure that U.S. exports of FMVSS-compliant vehicles are able to access these markets, including Colombia, Egypt, Laos, Morocco, the Philippines, Saudi Arabia, and Taiwan.

Lack of uniformity in the European Union. U.S. stakeholders continue to face challenges in the European Union in having to address disparate policies or procedures across Member States. Areas of concern include customs, labeling, agricultural biotechnology, packaging and packing waste, government procurement, investment, and intellectual property protection and enforcement.

Non-Market Policies and Practices. The PRC’s state-led, non-market approach to the economy and trade continues to shape the industrial policies that the PRC pursues, and provide unfair competitive advantages to PRC companies. This includes massive financial support and regulatory and other preferences and formal and informal policies and practices that seek to disadvantage foreign competitors. This behavior is heavily distorting and disrupting markets, which has led to severe and persistent excess capacity, as evidenced by the ongoing situations in the steel, aluminum, and solar industries, among others. The PRC is focused on numerous industries in advanced manufacturing, high technology, and other key economic sectors, where the PRC is setting and pursuing production and market share targets that can only be achieved through non-market means. USTR is determined to pursue all available domestic trade tools to protect the competitiveness of U.S. workers and businesses and will continue to work closely with like-minded allies and trading partners to address the PRC’s harmful policies and practices.

Data policies in furtherance of state intrusion. The United States is aware that data localization policies can be use by government to surveil their populations, interfere with labor rights, and otherwise compromise civil and political liberties. There are also circumstances in which data policies lack clarity and pose compliance challenges. USTR has identified problematic data policies across a range of countries, including the PRC and Russia.

To read the full report, click here.

To read the full press release as it appears the Office of the U.S. Trade Representative’s website, click here.

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Video 1: U.S. Trade Representative Katherine Tai testifies before the Senate Finance Committee about US trade policy.

To watch the full hearing, please click here.

Video 2: U.S. Trade Representative Katherine Tai testifies before the House Committee on Ways and Means about US trade policy.

To watch the full hearing, please click here.

The post Ambassador Katherine Tai’s Testimonies on the President’s 2023 Trade Policy Agenda appeared first on WITA.

I. INTRODUCTION

The Biden Administration promised to build the economy from the bottom up and the middle out, and we are doing just that. Unemployment is at its lowest rate in over 50 years. This Administration has seen more jobs created in two years than any other Administration has seen in four. Manufacturing is rebounding faster than it has in almost 40 years, while wages are rising, and rising even faster for lower- and middle-income workers. The American Rescue Plan, the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act were historic investments in America, and they are working.

The Biden Administration continues to believe that trade can—and should—be a force for good. Done right, and in coordination with other policy disciplines, it can grow the middle class, address inequality, tackle the climate crisis, and level the playing field by promoting fair competition. We remain committed to upholding a fair and open global trading system—one that puts working families first, raises living standards, ensures full employment, and promotes sustainable development.

We are continuing to rewrite the story on trade by bringing more people into the process and developing policies and initiatives that are resilient and sustainable and create broad-based growth. In 2023, our trade agenda will continue to focus on unlocking new opportunities for American workers and families—while also supporting and strengthening the middle class, driving decarbonization, and creating good-paying jobs across the American economy. In the aftermath of the COVID-19 pandemic and Russia’s brutal, illegal attack on Ukraine, it also means fortifying relationships with our partners and allies and strengthening critical supply chains to withstand shocks and disruptions to the system and to defend democratic values.

To realize this vision, we are continuing to forge the partnerships necessary to update and enforce the rules governing the global economy and trade.

In the Indo-Pacific and the Western Hemisphere, the United States is leading with a positive economic vision through the Indo-Pacific Economic Framework for Prosperity and the Americas Partnership for Economic Prosperity. With the European Union, we continue to deepen our relationship and intensify cooperation on pressing challenges, such as the People’s Republic of China’s (PRC) non-market policies and practices. Further, we are intensifying negotiations on a first-of-its-kind trade arrangement to address non-market excess capacity and the greenhouse gas emissions of imported steel and aluminum. We are also continuing to build out the Trade and Technology Council, and the Trade and Labor Dialogue under its umbrella, to pursue shared priorities, including supply chain resilience, challenges posed by non-market economies, inclusive digital trade, and the elimination of forced labor.

Additionally, in 2022, we kicked off ambitious initiatives with Taiwan and Kenya to deepen our trade and economic relationships with both partners, and we aim to make rapid progress on both initiatives in 2023. At the World Trade Organization (WTO), after working with WTO Members to deliver key outcomes during the Twelfth Ministerial Conference, the United States is driving the conversation on transforming the institution to be more responsive to the rapidly changing global economic environment and to the needs of everyday people.

Moreover, following the successful U.S. Africa Leaders Summit last year, the Administration will continue to strengthen our partnerships with the African continent and to support regional and continental integration efforts, with the well-being of workers, women, and youth to inform our work.

Our Administration is also fully committed to continued enforcement of our existing trade agreements to hold our trading partners accountable. This includes utilizing the United States-Mexico-Canada Agreement’s Rapid Response Mechanism to raise labor standards across North America and drive a race to the top. We are also using other mechanisms to open, maintain, and enhance access to markets and address unfair trade practices that harm our workers and businesses and ensure that they enjoy the benefits that they were promised.

Finally, a vital element of our effort to build an inclusive trade policy agenda is understanding the effects of our policies on underrepresented and underserved workers and communities, and ensuring that they have a say in how our policies are designed and implemented going forward. We know that an important part of making trade work for all Americans is having a better understanding of the effects of past trade policies.

At the Administration’s request, the United States International Trade Commission (USITC) conducted a first-of-its-kind study of the distributional effects of goods and services trade and trade policy on U.S. workers. Through an extensive information gathering process, the investigation brought to light what many already knew: while trade has benefited many, devastating effects have been concentrated in certain communities. The report also illustrated the gaps around data, and particularly disaggregated data, that can further inform a more equitable trade policy. USTR will continue working with the USITC and other partners to design trade policy that addresses inequality and supports the goals and aspirations of all Americans. USTR will also continue to implement its Equity Action Plan to ensure that racial and gender equity is embedded in its ecosystem.

By placing workers and everyday people at the center of our trade policy, the Biden Administration will continue to use trade as a force for good, to build a durable and fair tomorrow by pursuing resilience, sustainability, and inclusive prosperity.

To read the full trade policy agenda, please click here. 

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To read the full report from the Office of the U.S. Trade Representative, please click here.

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In Part One of this report, we provide an assessment of China’s WTO membership, including the unique and very serious challenges that China’s state-led, non-market approach to the economy and trade continue to pose for the multilateral trading system. In Part Two, we review the effectiveness of the various strategies that have been pursued over the years to address the unique problems posed by China. In Part Three, we emphasize the critical need for new and more effective strategies – including taking actions outside the WTO where necessary – to address those problems. Finally, in Part Four, we catalogue the numerous problematic policies and practices that currently stem from China’s state-led, non-market approach to the economy and trade.

PART ONE

Part One explains that when China acceded to the WTO, it voluntarily agreed to embrace the WTO’s open, market-oriented approach and to embed it in China’s trading system and institutions. China also agreed to take on the obligations set forth in existing WTO rules, while also making numerous China- specific commitments. As we previously documented, and as remains true today, China’s record of compliance with these terms has been poor.

After 20 years of WTO membership, China still embraces a state-led, non-market approach to the economy and trade, despite other WTO members’ expectations – and China’s own representations – that China would transform its economy and pursue the open, market-oriented policies endorsed by the WTO. In fact, China’s embrace of a state-led, non- market approach to the economy and trade has increased rather than decreased over time, and the mercantilism that it generates has harmed and disadvantaged U.S. companies and workers, often severely.

To read the full report from the United States Trade Representative, please click here. 

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In July 2018, USTR placed tariffs on certain products from China in response to an investigation that found certain trade acts, policies, and practices of China were unreasonable or discriminatory, and burden or restrict U.S. commerce. As of December 2020, the U.S. imposed tariffs on roughly $460 billion worth of Chinese imports under Section 301 of the Trade Act of 1974, as amended. Because these tariffs could harm U.S. workers and manufacturers that rely on these imports, USTR developed a process to exclude some products from these additional tariffs. U.S. businesses and members of Congress have raised questions about the transparency and fairness of USTR’s administration of this process.

GAO was asked to review USTR’s tariff exclusion program. This report (1) examines the processes USTR used to review Section 301 tariff exclusion requests and extensions and (2) describes how USTR evaluated those tariff exclusion requests and extensions, and the outcomes of its decisions.

GAO analyzed USTR’s public and internal documents relating to the exclusion and extension processes, including 16 randomly selected nongeneralizable case files, and data from USTR and the U.S. Census Bureau. GAO also interviewed agency officials.

What GAO Found

The Office of the U.S. Trade Representative (USTR) developed a process in July 2018 to review tariff exclusion requests for some imported products from China and later developed a process to extend these exclusions. From 2018 to 2020, U.S. stakeholders submitted about 53,000 exclusion requests to USTR for specific products covered by the tariffs. USTR’s process consisted of a public comment period to submit requests, an internal review, an interagency assessment, and the decision publication. USTR documented some procedures for reviewing exclusion requests. However, it did not fully document all of its internal procedures, including roles and responsibilities for each step in its review process. GAO reviewed selected exclusion case files and found inconsistencies in the agency’s reviews. For example, USTR did not document how reviewers should consider multiple requests from the same company, and GAO’s case file review found USTR performed these steps inconsistently. Another case file lacked documentation to explain USTR’s final decision because the agency’s procedures did not specify whether such documentation was required. Federal internal control standards state that agencies should document their procedures to ensure they conduct them consistently and effectively, and to retain knowledge. Without fully documented internal procedures, USTR lacks reasonable assurance it conducted its reviews consistently. Moreover, documenting them will help USTR to administer any future exclusions and extensions.

USTR evaluated each exclusion request on a case-by-case basis using several factors, including product availability outside of China and the potential economic harm of the tariffs. According to USTR officials, no one factor was essential to grant or deny a request. For example, USTR might grant a request that demonstrated the tariffs would cause severe economic harm even when the requested product was available outside of China. USTR denied about 46,000 requests (87 percent), primarily for the failure to show that the tariffs would cause severe economic harm to the requesters or other U.S. interests (see figure). Further, USTR did not extend 75 percent of the tariff exclusions it had granted.

What GAO Recommends

GAO recommends that USTR fully document the internal procedures it used to make Section 301 tariff exclusion and extension decisions. USTR concurred with these recommendations.

To read the full report as it appears on the U.S. Government Accountability Office website, click here.

To read the report as a PDF, click here.

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