S. 2168: Drones for America Act

The Drones for America Act is a piece of legislation introduced in the U.S. Congress that aims to amend the import duties on unmanned aircraft (drones) and their components from the People's Republic of China (China). The bill is primarily focused on enhancing national security and encouraging domestic manufacturing of unmanned aircraft by applying increased tariffs on these products imported from China.

National Security and Policy Objectives

The bill expresses that:

• The U.S. has a national security interest in securing the supply chains for unmanned aircraft.
• Tariffs on unmanned aircraft and related components from China will promote sourcing from U.S. manufacturers and allies, fostering resilient supply chains.
• Implementing protective tariffs is necessary to protect the domestic unmanned aircraft industry from foreign adversaries.

Increased Import Duties

The bill proposes changes to the Harmonized Tariff Schedule of the United States by:

• Introducing a 30% duty on unmanned aircraft from China for a specified period, rising to 35% after the first year, then 40% in the third year, and increasing by 5% each subsequent year until reaching 50% after five years.
• Mandating that parts for unmanned aircraft also incur similar duties and establishing that these rates are in addition to existing applicable tariffs.
• Setting specific tariff classifications for unmanned aircraft and parts imported from China under headings in the Harmonized Tariff Schedule.

Stricter Customs Regulations

The legislation includes provisions for stricter customs regulations, which state that:

• Importation of unmanned aircraft and parts is contingent upon certification proving that these products do not contain components made in China, such as flight controllers, operating software, and others specified in the bill.
• The U.S. Customs and Border Protection is required to confirm documentation’s accuracy before allowing these imports into the country.

Grant Program for Domestic Unmanned Aircraft Systems

Additionally, the bill establishes a Secure Unmanned Aircraft Systems Trust Fund to support a grant program aimed at:

• Providing grants to first responders, farmers, ranchers, and critical infrastructure providers to acquire secure unmanned aircraft systems.
• Supporting U.S. manufacturers of unmanned aircraft components for workforce development and increased production capacity.

The Trust Fund will be financed by the duties collected under the new tariff regime.

Exemptions and Future Implementation

Some unmanned aircraft may be exempt from these duties under certain conditions, particularly for those authorized by the Federal Aviation Administration (FAA) before a set date. The bill also outlines a timeline for implementing these changes, with various provisions taking effect in a phased manner over the next several years.

Definitions and Objectives of the Bill

The bill defines terms important to its enforcement and objectives, including what constitutes a "covered foreign entity," various governmental roles, and what defines "critical infrastructure." These definitions are essential for effective implementation of the legislation. The overarching goal of the Drones for America Act is to bolster domestic production of unmanned aircraft and enhance national security by making it more challenging for foreign adversaries to supply critical components to the U.S. market.

Relevant Companies

• DLTH (Duluth Trading Company) - May experience impacts related to supply chain shifts if they use unmanned aircraft in their logistics.
• AVAV (AeroVironment, Inc.) - Could benefit from increased domestic drone production and related funding opportunities.