On September 13, 2024, the Office of the U.S. Trade Representative published in the Federal Register, a notice modifying the Section 301 tariffs paced on certain imports from China. The action, following a more than month-long delay, increases the tariff rate on Electric Vehicles from China to 100 percent effective September 27, 2024, as well as a 25 percent tariff on textile face masks, batteries for EVs, and aluminum, zinc, chromium, ores, among other critical minerals.
The new tariff rate on aluminum and steel from China increases the total level to 50 percent when combined with the Section 232 action and aluminum to 35 percent for some products. Steel imports from China include many listed in Harmonized Tariff Schedule (HTS) Chapters 72 and 73 covering a range of products from flat rolled products to alloy tool steel and stainless pipe and tube. All increases are effective for imports entering the U.S. beginning 12:01AM on September 27, 2024.
The Federal Register Notice in Annex E contains a list of imported machinery products by HTS subheading eligible for consideration of a temporary exclusion. Importers may apply through the machinery exclusion process to temporarily suspend the tariffs. The eligibility list includes laser-operated tools for working metal, machining centers for working metal, lathes, including turning centers, profile forming machines, and numerically controlled press brakes.
U.S. House Completes “China Week”
The U.S. House of Representatives completed its “China Week” on Thursday, September 12, having passed roughly twenty bills, several bipartisan, to address a range of issues including currency, Taiwan, drones, agriculture, and exports. The legislation now moves to the U.S. Senate, which is unlikely to consider substantive trade bills until after the November election. Lawmakers could in December combine a number of trade-related proposals into a single title within broader legislation funding the federal government or the annual defense policy bill. Missing from the House floor this week were some of the more substantive proposals critics of China believe would prove more effective. Speaker Johnson had initially hoped to bring to the floor for a vote legislation closing the de minimis loophole allowing shipments of under $800 from China to enter the U.S. duty-free. In addition, the export control legislation moved last week, fell short of the more expansive China investment restrictions sought by both committees working on the legislation. Should Congress include a trade title in a year-end effort, lawmakers expect to include a number of tougher measures following negotiations between the House and Senate once lawmakers return to Washington after the November 5 election.
Court Upholds Overtime Pay Threshold Authority
On September 11, 2024, the Fifth U.S. Circuit Court of Appeals upheld the Labor Department’s use of a salary floor as a basis for establishing eligibility for overtime pay. The Court stated that the Labor Department has used a specific dollar value in issuing rules since passage of the Fair Labor Standards Act (FLSA). The ruling bolsters the Biden administration’s efforts to increase the number of employees eligible for time and a half by roughly four million workers.
The court noted that even without the Chevron deference to agency interpretation, the Department was interpreting FLSA correctly in using a dollar amount for EAPs. A federal judge in Texas blocked the rule in June from applying to Texas state employees.
The case centered on a challenge to the Trump-era rule increasing the overtime exemption threshold for Executive, Administrative, or Professional (EAP) workers to the previous annual salary base of $35,568. Those earning above that threshold were eligible for overtime pay. The Biden administration new overtime rule in effect since July 1, 2024, increased the standard salary level threshold for EAPs to $43,888 per year while the annual compensation threshold for highly compensated employees (HCE) increased to $132,964. Starting January 1, 2025, the standard salary-level threshold will further increase to $58,656 per year, and the HCE threshold will rise to $151,164. Beginning on July 1, 2027, and every three years after, the thresholds will automatically update to align with the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region, and the HCE total annual compensation threshold aligns with the annualized weekly earnings of the 85th percentile of full-time salaried workers nationally.
15% Corporate Minimum Tax Proposed on Profits Exceeding $1b
On September 12, 2024, the Biden administration released a Notice of Proposed Rulemaking to implement the Inflation Reduction Act’s Corporate Alternative Minimum Tax (CAMT). The Treasury Department estimates that were the proposed rule to take effect, roughly 100 corporations reporting in excess of $1 billion in profits would pay a minimum 15 percent tax on those profits reported to shareholders. Corporations paying regular taxes that equal or exceed 15 percent of their adjusted profits would pay no additional tax, according to the Treasury Department.