H.R. 4978 — Secure Trade Act

This section imposes a 10% ad valorem duty on imports of any good into the United States for each calendar year beginning on or after the date of enactment, in addition to any other duties applicable to such goods. The President may reduce this duty rate (but not to zero) for goods in any U.S. economic sector if determined to be in the national interest or national security interest, subject to prior consultation with the House Committee on Ways and Means and the Senate Committee on Finance.

This section requires the President to revise the Harmonized Tariff Schedule of the United States (HTS) to establish rates of duty applicable only to articles from the People's Republic of China (PRC), generally based on column 2 rates as of the day before enactment and modified as follows: (1) for non-strategic goods (not specified in section 203), increasing rates below 35% ad valorem to 35% ad valorem; (2) for strategic goods (specified in section 203), increasing ad valorem or free rates below 100% ad valorem to 100% ad valorem and specific/compound rates below the equivalent of 100% ad valorem to that equivalent; (3) annually adjusting specific/compound rates for inflation based on the Consumer Price Index for All Urban Consumers (using 1930 as the base year), with the first adjustment applying to entries on or after January 1, 2025 (including retroactive collection rules issued within 180 days of enactment). The section further requires the President to phase in these duty increases over five years—10% after 180 days, 25% after two years, 50% after four years, and 100% after five years from enactment—and directs the International Trade Commission to submit annual reports identifying strategic goods needing adjustment to reach 100% ad valorem equivalents. (Column 2 rates generally apply to imports from countries lacking normal trade relations with the United States.)

This section establishes a requirement that, notwithstanding any other provision of law, merchandise imported from the People's Republic of China be appraised for customs purposes on the basis of its "United States value"—defined as the price at which such merchandise or similar merchandise is freely offered for sale, packed ready for delivery, in the principal U.S. market to all purchasers at the time of importation. (As background, U.S. customs valuation generally prioritizes a transaction value based on the price paid by the importer but permits alternatives including a deductive value resembling United States value when transaction value is unavailable or unreliable.) Importers must submit a statement of United States value to U.S. Customs and Border Protection (CBP) upon entry; CBP must verify the value and report to the U.S. International Trade Commission (USITC) any inaccuracies along with a revised value.

This section specifies articles covered by the section as (1) those that, on the day before enactment, are identified on the Department of Commerce’s Draft List of Critical Supply Chains pursuant to Executive Order 14017 (February 24, 2021), subject to an investigation under Section 301 of the Trade Act of 1971 (i.e., unfair trade practices), or subject to an investigation under Section 232 of the Trade Expansion Act of 1962 (i.e., national security effects of imports); or (2) dual-use items (i.e., having both civilian and military applications), as determined by the Secretary of Commerce.

This section expands the definition of covered transaction under the Committee on Foreign Investment in the United States (CFIUS)—which reviews foreign investments in the United States for national security risks—to include greenfield and brownfield investments (i.e., the purchase, lease, or concession of U.S. real estate to establish a U.S. business operating a factory or other facility) proposed or pending after enactment that could result in control by the government of a foreign country of concern (i.e., China, North Korea, Russia, Iran, or other country determined by the Department of State) or related entities with a 5% or greater interest, appointment rights over board members or officers, or officials in governance roles in the preceding three years. (Thus, such transactions become subject to CFIUS review and mitigation or blockage if deemed a national security threat.) This section also requires mandatory filing of declarations for these transactions.