Tracking Tariffs and Trade
September 18, 2018
As we expected when the Trump Administration announced that 10% would be levied against its latest list of 5,745 Chinese imports would be implemented on September 24, China announced today that it would retaliate.
The Chinese Ministry of Commerce said that 10% tariffs would be levied against 3,571 products found in two lists (here and here) and 5% tariffs would be levied against 1,636 products in two other lists (here and here). They will also go into effect on September 24. The four lists were originally put out by the Chinese on August 3, and were originally set to be hit with four separate tariff rates.
Yesterday, in his statement announcing the tariffs, President Trump said that the U.S. would pursue a final list with $267 billion in Chinese products if China retaliated in any way. Therefore, it seems likely that another round of U.S. tariffs could be announced in the near term.
Finally, if you are still catching up on yesterday’s trade news, Prime has compiled the list of products that have been removed from the final list. You can find our list here.
September 17, 2018 (Update Part II)
When USTR released its final list of Chinese imports that would be subject to 10% tariffs on September 24, it announced that the list contained 5,745 full or partial tariff lines (out of the original 6,031).
USTR’s final list contains 11 tariff lines that have 10-digit product exemptions, which can be found at the end of their list, and includes items such as child safety seats, highchairs, play yards for children, and infant walkers.
We have put compiled the list of products that have been removed from the final list. You can find our list here.
September 17, 2018 (Update Part I)
As anticipated, the U.S. announced this afternoon that it would implement a list of approximately $200 billion in Chinese imports.
There was some hope last week that discussions around restarting high level trade talks between the U.S. and China could delay the implementation of those tariffs, but the Administration, particularly President Trump, seemed to reject that notion over the weekend. Additionally, before the list was announced, NEC Director Larry Kudlow said that Chinese economic reform efforts were “moving in the wrong direction,” indicating perhaps that the Administration’s leverage was not producing the desired effects, and they felt that doubling down might work.
With the implementation of this list, which will come September 24, the U.S. has now levied tariffs against $250 billion in Chinese products. That is almost half of the $505 billion in Chinese products that were imported into the U.S. in 2017. The only bright spot in the Administration’s announcement was that the tariffs would start out at 10% but would increase to 25% on January 1, 2019. This coincides with the original USTR announcement had reflected the 10% number, but a follow-up notice that pushed back the comment period referenced the 25% rate.
President Trump’s statement also says that if China retaliates, the U.S. would pursue a $267 billion list, meaning that virtually every product imported into the U.S. from China would have tariffs levied against it. China is expected to retaliate with $60 billion in tariffs on 5207 tariff lines, at rates of between 5% and 25% (for those lists, please refer to our August 3 update).
After an initial examination of the new list, it appears that around 300 tariff lines were removed from the initial lists. Press reports indicated that a line used for Apple products, like their watch, were removed. Additional removals include chemicals used for manufacturing, plastic gloves, and some agricultural goods. I will send around a complete list of products that were removed from the list as soon as I am able to put it together.
September 10, 2018
The new rule details changes to the process. Some of the highlights:
- Most importantly, the Department will grant properly filed exclusion requests which meet the requisite criteria, receive no objections, and present no national security concerns. This will help to address the series exclusion request backlog that exists.
- Companies that submit an exclusion request or objection will now have the opportunity to respond to information submitted by the other party
- Makes explicit changes to submit and protect confidential business information
- Adds an explanation for companies that details how an exclusion request can be submitted for a country that has been granted a country exemption
- Provides greater detail on the criteria the Department will consider in reviewing the exclusion request
- Details what rebuttal (and subsequent subrebuttal) comments should address, as well as establishes a 7-day rebuttal period
- With the new rebuttal process, the Department will also grandfather in
exclusion requests already posted, but not yet fully adjudicated, to be reopened to allow for rebuttals, as well as subrebuttals
Adds a caveat that the Department may allow for a longer (or shorter) exclusion period. The previous rule allowed for a 1-year exclusion.
September 7, 2018
Moments ago, while speaking to reporters on Air Force One, President Trump announced that the Administration had finished an additional list of imports from China on which to place tariffs.
He said this list would account for $267 BILLION (not a typo) in goods. It would be separate from the $200 billion list, on which the comment period closed last night.
USTR has not yet released such a list, but I felt it was important to flag for everyone. It is consistent with past Administration positions that they were willing to place tariffs on all Chinese goods coming into the U.S.
August 27, 2018
The United States and Mexico announced that they had reached a “handshake agreement” on bilateral issues contained within NAFTA, with the exception of one issue that Mexican negotiators refused to name. It is important to note that this announcement does not mean that a deal on NAFTA modernization is complete, as Canada has not been involved in these negotiations for five weeks.
President Trump’s Announcement
There is some confusion – like with many trade actions the Administration has taken – as the President said in his statement from the Oval Office that the they were “getting rid” of the name NAFTA because “it has a bad connotation because the U.S. was hurt very badly by it.” Instead, Trump said it would be a bilateral deal called the U.S.-Mexico Trade Agreement that Canada could join later. However, this contradicts what other Mexican and American officials have said, that the deal will remain trilateral.
Notably, while on the phone, the Mexican President persisted in calling it NAFTA. And, after his (rather strange) appearance via conference call to Trump’s NAFTA announcement, the Mexican President reiterated that Canada must be included in any agreement – seeming to throw cold water on President Trump’s “announcement” of a bilateral deal.
Trump also said he would “terminate” the existing deal, though he did not say if he would do it before or after this new trade deal is ratified. It also should be noted that negotiations were based on the assumption of a trilateral deal, so splitting NAFTA into two separate agreements (one with Mexico, and the other with Canada) would require that there be additional negotiations to resolve unsettled issues.
Additionally, Congressional trade leaders have maintained that the Administration cannot turn a trilateral deal into a bilateral deal without Congressional approval – even though USTR’s statement seems to indicate that POTUS thinks he can.
The sudden hard push to finalize negotiations is due to the change in Mexican government that will take place on December 1. The Trade Promotion Authority that the president is utilizing to renegotiate NAFTA lays out a 90-day clock that starts when Congress has been notified of such a deal. In order to have the current Mexican President Enrique Peña Nieto sign this agreement, it needs to be finished by September 1 at the very latest. Otherwise, Andrés Manuel López Obrador, the incoming President could demand changes – he has expressed concerns about the privatization of the Mexican oil industry that are included in NAFTA.
Some details that have been released on the agreement between Mexico and the U.S. American demands to change automobile rules of origin had long been a sticking point between the two countries, but this agreement would require 75% of auto content to be made in North America in order to qualify for duty-free treatment; NAFTA currently requires 62.5%. The new agreement would also require 70% of steel, glass, and aluminum used in these autos come from North America. Additionally, a substantial portion (40% for passenger vehicles and 45% for light trucks) of each vehicle would be required to be manufactured in a “high wage factory” – one that pats wages equal to $16/hour.
However, details on the rest of the agreement remain scant. There was some indication that a scaled-down version of the sunset clause had been agreed to, as well as changes to ISDS provisions, though those were unconfirmed and without a lot of detail. USTR Lighthizer said the Administration would send its notification letter to Congress on Friday, so we may have to wait until then to answer many of the questions that are swirling.
Negotiations with Canada are scheduled to begin “shortly” – probably later today or Tuesday. Mexican trade officials have said that trilateral negotiations will require about a week to complete, but there remain significant issues between the U.S. and Canada that must be ironed out, specifically in relation to U.S. demands that Canada open its highly restrictive dairy market.
Finally, we would caution that a preliminary deal does not mean a final deal. The White House has announced a number of “deals,” including most recently on trade with the EU that remain nebulous and incomplete at best.
August 8, 2018
In response to the Trump Administration’s announcement yesterday that they had finalized a second wave of $16 billion in tariffs on Chinese products (complete coverage of that can be found here), the Chinese announced that they too would implement tariffs on approximately $16 billion in products.
The Chinese Ministry of Commerce said that the new list of products that would be hit with the 25% tariffs would be implemented in parallel to the U.S. action. The Chinese list of products can be found here, and Prime’s translated version, which matches the HS tariff to the list the Chinese released (so there may be slight translation differences) can be found here.
The list released today is a substantially expanded list of 333 tariff lines, as the original list (Prime’s English version) consisted of only 114 tariff lines.
With the release of today’s list (and the finalization of yesterday’s list by the U.S.), both countries will have placed tariffs on $50 billion of imports as a result – and the retaliation for – the section 301 investigation. The U.S. is considering tariffs on $200 billion worth of additional Chinese products, and today’s announcement by the Chinese may lead to consideration of even more tariffs by this Administration.
August 7, 2018
Today, USTR finalized its second list of Chinese tariffs, which were originally announced as part of the response to the section 301 investigation.
This list includes approximately $16 billion in Chinese goods that are imported into the United States. Tariffs of 25% will be placed on all of these goods effective August 23.
Like the first list, which was finalized earlier this summer, there will be an exclusion process for companies and trade associations that are effected by the tariffs. The complete process to apply for exclusions for this tranche of tariffs will be announced in the near future.
According to USTR, 279 of the original 284 tariff lines are included in this list. The five lines that were removed are:
- 3913.10.00 – Alginic acid, and its salts and esters, in primary forms
- 8465.96.00 – Splitting, slicing or paring machines for working wood, cork, bone, hard rubber, hard plastics or similar hard materials
- 8609.00.00 – Containers (including containers for transport of fluids) specially designed and equipped for carriage by one or more modes of transport
- 8905.90.10 – Floating docks
- 9027.90.20 – Microtomes
August 3, 2018
August 1, 2018
As a consequence of making this announcement in the middle of the comment period, USTR has extended both the comment due date and the date by which to send notice that you would like to appear at the public hearing on this topic.
July 27, 2018
As Congress winds down and prepares to take a break (though possibly shortened in the Senate’s case), the trade world continues to move at a rapid rate. This past week has been an especially newsy one on the trade front, with action in every one of the closest watched sectors. For more information on the Administration’s efforts to blunt the impact of retaliatory tariffs on the agricultural sector, please see our update from Tuesday.
The trade news that received the most headlines this week was the meeting between President Trump and Jean-Claude Juncker, the president of the European Commission. The meeting generated perhaps the most positive sign of a thaw in trade relations between the two since the U.S. imposed steel and aluminum tariffs. In a joint statement, Trump and Juncker agreed to “work toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods… reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans.”
However, there were no concrete steps taken by either country to agree to remove any tariffs that had been placed in recent months. Further, the agriculture piece of the statement seems to have been interpreted in two completely different ways. The Trump Administration was quick to say that the deal included all agricultural products, not just soybeans, while EU officials said that agriculture would not be included in future discussion. Agricultural issues have been notoriously contentious between the U.S. and EU, and many were quick to point out that Juncker ultimately had no power to force EU countries or companies to import more agricultural products from the U.S.
During a press conference after the meeting, President Trump said the U.S. would hold off on implementing additional tariff action “unless either party terminates the negotiation,” seeming to suggest that the EU would be granted a waiver or exemption if tariffs were levied on foreign auto imports in the coming months. This is, obviously, welcome news. However, it is important to realize that the Trump Administration has demonstrated a willingness to change positions in similar situations. Less than two weeks after Treasury Secretary said that the U.S had “agreed to put the tariffs on hold” while negotiating a deal with China, the U.S. announced that those same tariffs would actually be implemented. A month (or however long it takes to conclude the 232 auto investigation) is a long time in this atmosphere, and an exemption should in no way be considered a foregone conclusion until it is included in a formal, written announcement by the Administration.
There continues to be a lack of substantive high-level discussions between the U.S. and China to resolve the ongoing, and ever escalating trade dispute. The lack of such discussions has been increasingly concerning to Congress, and on Wednesday Republican members of the House Ways and Means Committee sent a letter to the President expressing that he engage directly with Chinese President Xi to reach a conclusion to the ongoing issues.
China, while not yet announcing their next phase of retaliation in response to the most recent list of proposed by the U.S., has taken steps to implement non-tariff barriers that many have feared. Wednesday, Qualcomm announced that it was being forced to abandon a proposed acquisition of NXP Semiconductors because Chinese regulators had refused to give their approval, even after the deal had been approved by antitrust officials in eight other countries – including the U.S. Facebook was also denied the opportunity to establish a subsidiary in the Chinese province of Zhejiang.
While the Chinese have said that these actions are in no way related to the ongoing tariff dispute, there is little doubt that does not match with reality, and these high-profile rejections are a preview of what it likely to occur if an agreement is not reached. Because the U.S. only exports about $147 billion in goods to China, the Chinese will be forced to look in another areas to retaliate equally against the U.S. Regulatory action, allowing U.S. produce imports to sit in port until they spoil, and boycotts of American products and brands are likely to increase in the coming weeks. These actions could potentially cause significant harm to American companies conducting business in China.
As a brief reminder, requests to appear at USTR’s hearing on the proposed $200 billion tariff list, as well as a summary of expected testimony is due today. Comments on USTR’s second list of goods to put tariffs on were due Monday, and that list is expected to be finalized and implemented in the next several weeks.
232 Auto Tariffs
While the discussions with the EU may limit the impact of such tariffs (though, again, I urge caution when thinking that the EU is out of the woods on this issue), the Commerce Department is continuing with its investigation into whether the import of autos and auto parts constitutes a national security threat. The timeline for the conclusion of such an investigation still seems to be before the end of September – likely sometime in August – and seems almost certain to reach the conclusion that imports of these products should face tariffs.
In order to head off some of the consequences that will emanate from such a decision, Senators Doug Jones (D-AL), Lamar Alexander (R-TN), Lindsey Graham (R-SC), and Bob Corker (R-TN) introduced legislation that would require the International Trade Commission to study the “economic well-being, health, and vitality of the United States automotive industry” before any 232 automotive tariffs could be applied. The Senators represent states that have seen significant investments made by foreign automobile manufacturers and would likely be greatly impacted by the proposed tariffs.
While the majority of House and Senate Members have been hesitant to take steps to curtail the President’s use of tariffs, a decision to implement automotive tariffs could be a catalyst for them to take such action.
There were positive signals that NAFTA negotiations will resume in short order after taking a hiatus due to the Mexican presidential election. In his testimony before the Senate Appropriations Committee yesterday, USTR Lighthizer expressed confidence that a conclusion of negotiations with Mexico would reach “some kind of a conclusion” before the end of August. If an agreement wasn’t reached with them by this date, USTR would not be able to meet the 90-day congressional notification deadline that was set out in TPA before the current Mexican president leaves office on December 1, thus necessitating negotiations with the new Mexican Administration.
In a letter sent to President Trump, president-elect Andrés Manuel López Obrador (colloquially known as AMLO) said that it was important “to conclude the renegotiation of the North American Free Trade Agreement” because “prolonging the uncertainty could slow down investments in the medium and long-term.” The letter also said that AMLO’s transition team would participate in coordination with the current Mexican team. President Trump’s response that negotiations must go “quickly” or that “otherwise [he would] go a much different route… [that] would be far more profitable for the United States and its taxpayers.”
However, for all the talk of moving quickly, there are no signs that the U.S. is interested in moving away from its most controversial demands, including the sunset clause. Yesterday, Ambassador Lighthizer again reiterated the need for such a provision, but he received significant pushback from members of the Subcommittee, with Members saying that a provision would likely cause a renegotiated NAFTA to lose necessary Republican votes.
Miscellaneous Tariff Bill
Yesterday, the Senate passed its amended version of the Miscellaneous Tariff Bill (MTB) Act of 2017, H.R. 4318, by voice vote. The bill differs slightly from the version that had previously passed the House by a 402-0 vote in January due to an amendment added by Finance Chairman Orrin Hatch (R-UT). The amendment removes the sections on propargyl butycarbamate, esfenvalerate, and collapsible insulated food and beverage bags, while also making changes to the sections on ski and snowboard boots, men’s shoes with outer soles and uppers of rubber or plastics valued over $3 but not over $6.50 per pair, and men’s shoes with outer soles and uppers of rubber or plastics valued over $6.50 but not over $12 per pair. Because of the changes, the legislation will, once again, have to pass the House, probably in September when that body returns from August recess.
This legislation implements some 1,800 of the 2,500 recommendations on raw and intermediate goods from the International Trade Commission (ITC) report on which tariffs to adjust or suspend, a result of American businesses petition for such changes. MTB legislation has, in the past, moved expeditiously. However, the previous authorization had expired in 2012 and further attempts ran afoul of the House ban on earmarks.
July 24, 2018
July 10, 2018, Part II
The United States Trade Represented released its long-awaited (and dreaded) list of $200 billion – not a typo – in Chinese products that the U.S. is proposing to place tariffs on.
Products on the list include include a wide variety of types of seafood, produce, minerals and ores, chemicals, tools, antiques, pet supplies, leather goods, electrical equipment and goods, furniture, various parts for motor vehicles and heavy machinery like tractors, elevators, offshore drilling platforms and equipment, glass, clothing and thousands of other products.
Requests to appear at the hearing on this list, as well as a summary of expected testimony is due July 27.
Written comments on the list are due August 17.
A hearing will take place August 20-23.
The list stems from a directive given by President Trump on June 18. The President has tied this increase in tariff action to Chinese retaliation against the original $50 billion in tariffs that resulted from USTR’s section 301 investigation, as well as ambiguous “Chinese practices.”
The combination of these two proposed tariff lists, reaching $250 billion, would account for about half of all Chinese goods imported into the U.S. in 2017.
If enacted, these tariffs will mark a clear escalation in trade hostilities between the U.S. and China. China has already promised a dollar-for-dollar retaliation for any actions taken by the United States. As we’ve mentioned in past editions of Tracking Tariffs and Trade – and it bears repeating – the U.S. only exported about $147 billion in goods to China in 2017. Therefore, any retaliation taken by the Chinese above that amount would likely be taken against services trade, including financial services, or by non-tariff action including regulatory and market access restrictions.
This list is likely to ramp up the concern on the Hill regarding the Administration’s trade actions, as well. Tomorrow, the Senate will take up a nonbinding sense of the Senate measure to express their opinion that Congress should play some role in levying tariffs, like those as a result of section 232. Sen. Flake, one of the measures supporters, told reporters that he expects a majority of both the Democratic and Republican caucuses to support the measure.
July 10, 2018
Today, USTR announced the process by which stakeholders can apply for product exclusions for the 301 tariffs that went into effect last Friday, July 6.
Interestingly, the USTR announcement specifically states that exemptions may be sought by trade associations on behalf of their members, a provision that was not explicit in the Department of Commerce process for section 232 product exemptions.
Product exclusion requests, based on the 10 digit subheading of the covered tariff, that contain “the identity of the producer, importer, ultimate consumer, actual use or chief use, or trademarks or tradenames” will not be considered by USTR.
Additionally, exclusion requests must include the annual quantity and value of the Chinese-origin product (trade associations should base this information of their members’ data); whether the products is available only from China; whether the imposition would cause severe economic harm to the requester or other U.S. interests, and whether the product is “strategically important or related to ‘Made in China 2025’ or other Chinese industrial programs.
Requests for exclusions are due to USTR by October 9.
Once an exclusion request is posted on the docket (USTR 2018-0025), parties will have 14 days to respond, and there will be a subsequent 7 day period for replies to those responses.
Exclusions from the section 301 tariffs will be effective for one year after the publication of the exclusion determination and retroactive to July 6, 2018.
June 21, 2018
This is just a quick update to inform you that the period by which to submit comments on the Department of Commerce’s proposed 232 investigation into autos and auto parts has been extended.
Comments and requests to appear at a hearing on the issue are now due by June 29 (next Friday).
Rebuttal comments are now due by July 13.
For more details on the proposed action, please see our May 23 update.
June 18, 2018
Like he promised on Friday when announcing that the $50 billion in proposed tariffs against China would go through, President Trump has instructed USTR to study adding additional tariffs for Chinese products imported into the U.S. because of Chinese retaliatory tariffs (in response to the 301 tariffs).
In a statement released tonight, the Administration stated that USTR would study and release a list of $200 billion – not a typo – in Chinese goods against which 10% tariffs could be levied, with further promises to keeping adding to the tariffs ($200 billion at a time) if China doesn’t “change its practices” AND relent on the retaliatory tariffs that they announced on Friday (Prime’s English versions can be found here and here).
It is likely that China will respond in a similar manner. However, it is important to remember that China only imports around $130 billion in American products. Therefore, should they retaliate, they will be forced to expand their scope to match U.S. actions dollar-for-dollar. Services, visas, and investment are likely to be at the top of any such list.
Additionally, in a rebuke to the Administration, Senators refused to remove the provision in the National Defense Authorization Act that would essentially undo the “deal” struck between the Department of Commerce and the Chinese government to allow Chinese telecom firm ZTE to continue to operate in the U.S. after it was found to have violated a 2017 agreement by doing business with North Korea and Iran.
Our full coverage on the ongoing US-China trade dispute (which is quickly escalating to become a full-on trade war) can be found here.
June 16, 2018
When the U.S. announced its list of tariffs – in two parts – on $50 billion in Chinese goods (the first list of 818 (out of the 1,333) products will go into effect on July 6) and the new set of 284 products will go into effect after further public comment, the Chinese government stated that it would retaliate immediately.
When the results of the Section 310 investigation by was originally announced by USTR in early April, China released a preliminary tariff list laying out the products that it was planning to retaliate. Today, they revised that list, though much of it remained the same, with some significant additions.
Like the American tariff list, the Chinese split their list into two different parts. The first list contains 545 tariff lines, constituting $34 billion – mainly focused on agriculture, food, cars, and aquatic products. It will be implemented July 6 to coincide with the American tariffs. The Chinese list can be found here, and Prime’s list of the tariffs in English can be found here (our list matches the HS tariff codes to the list the Chinese released, so there may be slight translation differences).
The second Chinese tariff list (Prime’s English version here) consists of 114 products that will be implemented as soon as the second American tariff list goes into effect. In addition to various chemicals and medical equipment, this list also includes energy products like coal, lubricating oils, diesel oils, and various bitumen products.
In his announcement this morning, President Trump said that the U.S. would retaliate against any tariff action taken by the Chinese. With the implementation of these tariffs, it increases the likelihood that the U.S. will levy additional tariffs, perhaps even the $100 billion in additional tariffs that President Trump instructed USTR to study in April. USTR has not released a list of what products such a list would incorporate, but it would almost certainly have to include a number of consumer products.
June 15, 2018
This morning, President Trump announced that the 25% tariffs on $50 billion in Chinese imports will, indeed, be implemented.
The products that were originally included on a list published by the United States Trade Representative and put up for public comment, focused on a number of goods that were included in China’s Made in China 2025 program.
The $50 billion in tariffs will be applied to 818 (out of the 1,333) products that were included on the original USTR list. These products cover around $34 billion in Chinese imports. The other $16 billion in tariffs will come on an entirely new set of 284 products, which USTR says will undergo a public comment period (there has not yet been a timeline given).
Additionally, in his announcement this morning, President Trump threatened to levy additional tariffs should the China retaliate. China has already stated that it will retaliate; several months ago it released a target list of American imports – consisting of a number of high-value agricultural targets, including soybeans. Our complete coverage on this issue can be found here.
The U.S. implementation of these tariffs, which Treasury Secretary Mnuchin said it was backing away from only a month ago, could also threaten a number of deals the Administration has struck with the Chinese government in recent weeks. As part of a trade deal to Beijing led by Commerce Secretary Ross, the Chinese agreed to buy $70 billion in agriculture and energy products only 10 days ago. That deal seemed to be conditional on these tariffs not being implemented, so it seems likely it will be taken off the table.
June 6, 2018
Senator Bob Corker (R-TN) formally introduced his billtoday to reign in the power of the Executive Branch to levy tariffs using Section 232.
The legislation would give Congress 60 days to review and vote on any tariffs imposed under Section 232, which the current Administration has used to levy tariffs on some of America’s closest allies and trading partners. The bill would also be retroactive for two years, theoretically giving Congress power to rescind the 232 steel and aluminum tariffs, as well as to prevent any possible tariffs on autos or auto parts that the Administration may implement after the conclusion of the investigation they launched into that sector several weeks ago.
Notably, Corker’s bill has 9 cosponsors – 5 Republicans and 4 Democrats: Sens. Heidi Heitkamp (D-ND), Pat Toomey (R-PA), Mark Warner (D-VA), Lamar Alexander (R-TN), Brian Schatz (D-HI), Ron Johnson (R-WI), Chris Van Hollen (D-MD), Mike Lee (R-UT), and Jeff Flake (R-AZ) – a rather interesting group that spans much of the ideological spectrum in the Senate.
Corker has indicated that he will attempt to get his bill added to the National Defense Authorization Act (NDAA). That seems unlikely, however, as it is must-pass legislation and this tariff provision would likely cause it to be vetoed by the president. However, if Corker forces a vote on this bill as an amendment, it could reveal how much actual support there is on both sides of the aisle to take on the president’s trade power.
The Senate version of the NDAA is also receiving additional trade attention because it contains reforms to the CFIUS process. The text of the legislation, which was released early this morning, contains the Foreign Investment Risk Review Modernization Act (FIRRMA), S. 2098, which was marked up and reported out of the Senate Banking Committee. FIRRMA is bipartisan legislation, with Sen. John Cornyn (R-TX) and Sen. Dianne Feinstein (D-CA) serving as the primary sponsors of the legislation, which had 11 additional cosponsors.
The CFIUS legislation included in NDAA would create a process to identify critical technology that is not subject to export control, and mandate that CFIUS review transactions involving those technologies to ensure that they don’t constitute a risk to national security. The new CFIUS language also sets up a process for companies to challenge CFIUS decisions that block transactions. Finally, the measure would require a report by the Secretary of Commerce on the foreign direct investment by China, including a breakdown by value, NAICS code, and investment type. The report would also be mandated to include the number of U.S. affiliates under the control of China, U.S. companies purchased by China, and an investigation into the pattern of Chinese investment. Prime’s previous CFIUS coverage can be found here.
May 31, 2018 (Update II)
This morning, when the U.S. announced that it would no longer exempt the EU, Canada, and Mexico from its steel and aluminum tariffs, we said that we expected Canada to issue retaliatory tariffs.
Moments ago, the Canadian government did precisely that. Prime Minister Justin Trudeau, in perhaps his strongest statement against President Trump and the U.S., stated that it was “an affront” to Canadian soldiers who died fighting next to Americans for the U.S. government to say that Canada was in any way a threat to national security. Further, he stated that Canada believed that “at some point, common sense will prevail… [but there is] no sign of that action today by the U.S. Administration.”
Canadian Minister of Foreign Affairs Chrystia Freeland then took the stage to announce that there would be a dollar-for-dollar tariff retaliation for the tariffs levied by the U.S. She stated that the Canadian government would issue 25% and 10% tariffs on $16.6 billion in imported American goods. These tariffs will go into effect on July 1. A complete list of products that will be effected can be found here.
The tariffs hit a wide variety of American industries. In addition to various steel and aluminum products, the Canadians hit toilet paper, pizza, chocolate, water, coffee, ballpoint pens, frozen quiche, and scores of other imports.
There is an opportunity for Canadian companies and individuals to comment on this list. Comments must be received by June 15, and the requirements for such comments, as well as where to send them, can be found here.
In the press conference announcing these tariffs, the Prime Minister also made NAFTA news. Saying that (earlier this week) he felt a deal was close, Trudeau offered to come to the U.S. to finalize an agreement. However, U.S. Vice President Pence called him on Tuesday to state that agreeing to the U.S.-offered five-year sunset clause would be a precondition of such a visit. Trudeau refused to agree to such a stipulation and the visit was cancelled. If the U.S. is still insistent on a sunset clause, it would seem to indicate that a NAFTA deal is as far away from completion as it could be.
May 31, 2018
As we mentioned was likely in our tariff overview piece yesterday, the White House announced that it will end the Section 232 steel and aluminum tariff exemptions for the EU, Canada and Mexico.
Imported steel will now be hit with a 25% tariffs and imported aluminum will face a 10% tariff as of 12:01 tomorrow morning (June 1).
Canada represents 17% of all U.S. steel imports, and 90% of all Canadian exports (around $5 billion per year) are destined for the U.S.
This move by the Trump Administration against arguably the closest U.S. trading partners will likely have a significant impact on other trade actions.
As the U.S. is in the midst of attempting to renegotiate NAFTA, there is no doubt that these tariffs will further complicate the already complicated process. Commerce Secretary Wilbur Ross explicitly tied the imposition of steel and aluminum tariffs on Canada and Mexico to stalled NAFTA talks saying, “those talks are taking longer than we had hoped. There is no longer a very precise date when they may be concluded, and therefore [Canada and Mexico] were added into the list of those who will bear tariffs.”
Canadian Foreign Affairs Minister Chrystia Freeland was scheduled to be in Washington for several days of trade meetings this week. However, she unexpectedly cut her visit short. Freeland stated that it was “frankly absurd” that the U.S. would consider Canada a national security threat and threatened to retaliate against any tariffs, saying that the Canadian government “is absolutely prepared to and will defend Canadian industries and Canadian jobs.” Canadian officials are said to be considering various tariff approaches, including specifically targeting the American agricultural sector because it is among the most vulnerable to retaliatory trade measures.
Any tariffs levied by Canada (and possibly Mexico) will likely share similarities to those approved by the EU in response to the U.S. steel and aluminum tariffs.
The EU tariffs – 25% on $3.34 billion in goods – will go into effect on June 20. These tariffs will cover products including agriculture products, makeup, tobacco, textiles, boats, motorcycles, bourbon, and others. The complete list of products can be found here.
In response to the U.S. action, Jean-Claude Juncker, President of the European Commission said the EU had “no choice but to proceed” with a WTO case and retaliatory tariffs. EU Trade Commissioner Cecilia Malmström said that the EU had done everything in its power to avoid this outcome and called today “a bad day for world trade.”
Mexico, which had previously not announced how it would handle American tariffs on steel and aluminum announced a short time ago that it too would impose retaliatory tariffs. These tariffs will cover flat steel, lamps, grapes, blueberries, sausages, cheese, pork bellies and shoulders, apples, and other products. They have not yet released a list of the tariff codes affected.
May 30, 2018
Once again, the trade front is heating up on a variety of issues, with some of them expected to come to a head this week.
Section 232 Investigation on Autos: The Commerce Department formally released its notice for public comment and a public hearing date for its new 232 investigation into auto and auto part imports, which was announced last week.
All comments, requests to testify at the public hearing, and a summary of testimony must be submitted by June 22.
Rebuttal comments are due on July 6.
The 232 public hearings will take place on July 19 and 20 at the Department of Commerce.
Steel and Aluminum Tariffs: The exemption for steel and aluminum tariffs, currently enjoyed by some of the United States’ closest trading partners, expires in two days (June 1), and there is little sign that there will be any further exemptions. EU Trade Commissioner Cecilia Malmström said that she expects the U.S. to issue either a tariff-rate quota or a hard quota against EU steel and aluminum. If this occurs as expected, the EU will retaliate with 25 percent tariffs on approximately $3.34 billion in goods. The EU tariffs will go into effect on June 20 with a possible second round on $4.22 billion of goods set for March 23, 2021. These tariffs will cover products including agriculture products, tobacco, textiles, steel, and others. The complete list of tariff codes affected can be found here.
Section 301 Tariffs: After suggestions from Treasury Secretary Mnuchin that the trade war with China, which included tariffs on $50 billion in Chinese products had been “put on hold,” the White House announced the exact opposite. In a statement, the White House said that it would announce the final list of products covered by the tariffs on June 15 and would impose them “soon after.”
Like many U.S. trade leaders, the Chinese government issued a statement yesterday after the U.S. announcement saying they were “surprised” by the decision. The Chinese government also stated that it violated the agreement reached by both governments only weeks ago. The decision to go forward with the tariffs also puts in jeopardy planned Chinese purchases of agriculture and energy products, negotiated as part of the US-China agreement. Commerce Secretary Wilbur Ross is scheduled to be in China on Saturday to finalize that agreement. It seems unlikely that such a purchase will continue on unchanged if China views the U.S. as going back on a previously negotiated agreement.
May 23, 2018
Tonight, President Trump announced that he had instructed Secretary of Commerce Wilbur Ross to “consider” beginning a Section 232 investigation into the import of automobiles, trucks, and automotive parts and their impact on national security. The Commerce Department soon followed with an announcement stating that it would, indeed, undertake such an investigation.
These announcements follows a cryptic tweet this morning about “good news” that was coming for “American Autoworkers.”
Like many trade actions with the Trump Administration, there are many questions, few answers, and considerable uncertainty. The Commerce statement says that it will focus on “automobiles, including SUVs, vans and light trucks, and automotive parts.” Further, the investigation will explore whether the “decline of domestic automobile and automotive parts production threatens to weaken the internal economy of the United States, including by potentially reducing research, development, and jobs for skilled workers in connected vehicle systems, autonomous vehicles, fuel cells, electric motors and storage, advanced manufacturing processes, and other cutting-edge technologies.”
The Commerce Department states that a Federal Register announcement with a hearing date and opportunity to comment will come in the near future.
Launching a 232 investigation is the start of a lengthy process and could follow the path of the 232 investigation into steel and aluminum. That investigation took ten months before the findings were announced, and there are still outstanding questions about exemptions, for both countries and products – the current exemption for several countries expires next week on June 1. The U.S. and the EU continue to discuss a continued exemption, though signs point to those discussions going poorly. Interestingly, President Trump has criticized the EU for putting its own tariffs on imported automobiles.
This investigation also comes in the midst of other ongoing trade issues. NAFTA renegotiation is mired in quicksand, with many chapters and ideas – including an auto rules of origin provision – remaining unresolved; a May 17 deadline for conclusion of negotiations came and went with no final deal. At this point, there seems to be only a slight chance of a comprehensive renegotiated package receiving a vote in Congress in 2018. Additionally, there are still significant trade issues with China that need to be worked out, although the section 301 tariffs have been put on hold for the time being.
This remains a fluid situation, and we will keep you updated as we learn more.
April 30, 2018
The Trump Administration will grant a one-month extension to countries that were initially given temporary exemptions from the steel and aluminum tariffs.
Canada, Mexico and the countries within the European Union will now have until June 1 to finalize a deal for a permanent tariff exemption.
The extension gives the U.S., Mexico, and Canada time to come to an agreement on NAFTA modifications, which President Trump has previously stated would be a requirement for a permanent exemption.
Additionally, South Korea, which was originally granted a temporary exemption, will sees its exemption made permanent, thanks to the agreement between the U.S. and South Korea to make minor changes to the KORUS Free Trade Agreement.
The White House also announced that it had reached agreements in principle with Argentina, Australia, and Brazil to address steel and aluminum imports, which will allow those countries to also be permanently exempt. Details of those agreements are likely to be finalized in the coming days and weeks and will be announced by USTR.
April 5, 2018
In a move that should not come as a surprise to those that have observed trade and tariff action during the Trump Administration, a short time ago President Trump instructed USTR to investigate whether it would be appropriate to levy $100 billion in additional tariffs on Chinese products imported into the United States. This $100 billion would not include the already announced $50 billion in tariffs levied as a result of the Section 301 investigation.
In making this announcement, the White House drew a direct connection between these potential additional tariffs and the Chinese action on Wednesday to hit $50 billion in American goods with 25% tariffs.
While the announcement mentions that the Chinese tariffs on products from the U.S. will “harm our farmers and manufacturers,” it makes no mention on how adding additional tariffs to Chinese products, as well as the Chinese retaliation that will likely follow, wouldn’t exacerbate this harm.
In a statement released by USTR, Ambassador Lighthizer called these potential new tariffs “appropriate,” and said that any such tariffs would go through a similar public comment period that is currently underway for the $50 billion in Chinese products.
This tariff announcement comes after Administration officials have spent the last several days trying to soft pedal the original tariff announcement, with new NEC head Larry Kudlow saying that the list was just a “proposal” and may not even take effect. Even if these announcements are just negotiating tactics, as Kudlow stated, it seems unlikely that they won’t have an economic effect- immediately after this evening’s announcement, the Dow Future’s market was down more than 400 points.
April 4, 2018
As we predicted yesterday, the Chinese government was quick to respond to USTR’s list of goods that would be subject to higher tariffs due to the findings of the Administration’s Section 301 Investigation.
The Chinese government announced that it would place 25% tariffs on approximately $50 billion in imported American goods, effecting 106 products.
Among the products that will be impacted include soybeans ($12.3 billion in exports in 2017); new and used passenger cars ($10.5 billion in exports in 2017); and aircraft and related aviation products ($16.3 billion in exports in 2017). In this round of tariffs, U.S. agricultural and farming products were hit especially hard, with products such as cranberries, beef, tobacco, corn, and cotton included.
April 3, 2018
- April 23: Due date for filing requests to appear and a summary of testimony for the public hearing
- May 11: Written comments due
- May 15: Section 301 Committee public hearing
- May 22: Due date for submission of post-hearing rebuttal comments
This USTR list comes the day after China imposed tariffs on 128 U.S. products in response to U.S. tariffs on steel and aluminum. It is likely that the Chinese government will now announce further tariffs in response to these tariffs, which total approximately $50 billion in imported products.
April 1, 2018
Late Sunday night, the Chinese government announced that it would follow through with its threat of placing tariffs on American goods in response to the steel and aluminum tariffs levied by the United States.
These Chinese tariffs will go into effect on Monday, April 2.
The announced tariffs will cover 128 products imported from the United States, and the covered products appear to match a list released by the Chinese government on March 23 that totals $3 billion.
120 products, including fruits, nuts, ethanol, and wine, will be subject to a 15% tariff. However, pork and seven other products will be subject to a 25% tariff. China is the third largest market for American pork.
The announcement comes as the United States Trade Representative is expected to release a list of Chinese goods this week that the Trump Administration will target with tariffs as a result of the section 301 investigation. Those tariffs are expected to cover between $50 billion and $60 billion in imported products.
March 27, 2018
The United States and South Korea have reached an agreement in principle to amend the free trade agreement between the two countries, which is commonly referred to as KORUS.
Because the United States chose to negotiate outside of the congressionally-regulated Trade Promotion Authority (TPA), any changes made to the agreement cannot require changes to law or implementing language.
Below are the highlights of the agreed upon changes.
- U.S. Truck Tariffs (25%) will continue until 2041. They were scheduled to end this year.
- Doubles the cap (from 25,000 to 50,000) per manufacturer per year for U.S. automobiles imported into South Korea that utilize U.S. safety standards
- Eliminate burdensome regulations, including additional environmental testing in Korea
- Aligning Korean vehicle testing standards with the U.S.
- Korean recognition of U.S. standards for auto parts needed to service imported U.S. vehicles
- Improvements to CAFE and ECO standards & take U.S. regulations into account and setting standards
- Improvement in Korean custom inspections at the border; they also established a working group to monitor
- The pharmaceutical reimbursement will now apply to American companies; Korea will amend their premium pricing in 2018
- Subject 232: Korea will be subject to the Aluminum tariff. However, on the steel tariff, they will just be subject to a hard quota that is product-specific (70% of the average annual export volume), which will result in about 30% reduction in imports
- Currency Manipulation: There will be a side agreement between the U.S. Treasury Department and the Korean Ministry of Strategy & Finance. It will focus on prohibiting competitive devaluation & ensure commitments on transparency and accountability. It will not be subject to ISDS. Notably, the currency manipulation agreement is not enforceable.
March 22, 2018- Update 3
- South Korea
- Members of the European Union
Interestingly, this action means that four of the top five countries who export steel into the United States are now exempt from the tariffs.
Additionally, it is important to note that other countries, such as Japan, that had been floated as possibly receiving exemptions from the tariffs were left off of the final list.
March 22, 2018- Update 2
In the first sign of what could be escalating trade actions, China announced its plan to hit back at U.S. products imported into the country. The move is in response to the Trump Administration’s decision to levy tariffs on approximately $60 billion worth of Chinese imports.
The goods targeted by the Chinese, which total about $3 billion, fall into seven categories and are comprised of 128 separate products. 120 of these products (around $977 million worth) will be hit with a 15% tariff.
According to the release these will include:
- Fresh Fruit
- Dried Fruit and Nut Products
- Seamless Steel Pipes
- Modified Ethanol
- American Ginseng.
A second set of goods will face a 25% tariff. They include recycled aluminum, pork and processed products.
The complete list of proposed items to be included in the tariffs has not yet been released by the Chinese government but can likely be expected in the coming days.
March 22, 2018
The Trump Administration announced tariffs today on approximately $60 billion worth of Chinese imports, as President Trump campaign attempts to fulfill his campaign promise to be tougher on China’s trade practices and alleged intellectual property theft. The Presidential Memo can be found here.
The formal 301 Investigation Report had four key findings: China conducts and supports cybertheft; China uses discriminatory licensing processes; China forces technology transfers through joint venture requirements, foreign investment restrictions, and review and licensing processes; and China directs and facilitates investments and acquisitions that generate large-scale technology transfers. The USTR Fact Sheet can be found here.
As a result of these findings, the President instructed various Administration agencies to take action to protect U.S. intellectual property and technology. USTR will have 15 days to produce a list of products that will be subject to the tariffs. After a list is released, it will go through a formal 60-day comment process. The public will have 30 days to files comments on the list after it is formally published in the Federal Register. USTR will also announce the date of a public hearing for the products.
While a list of products will be released in the next two weeks, USTR Lighthizer previewed the types of products that will likely be included in his testimony in front of the Senate Finance Committee today. He said that it would be his preference to target products included in the Made in China 2025 agenda that has been publicized by the Chinese government. Those products would include:
- new advanced information technology
- automated machine tools & robotics
- aerospace and aeronautics equipment
- maritime equipment and high tech shipping
- modern rail transport equipment
- new energy vehicles equipment
- power equipment
- agriculture equipment
- new materials in biopharma and advanced medical products
Additionally, the 301 action signed by the president today also instructs the Department of Treasury to produce a list of investment recommendations for the Administration within 60 days.
China has promised to respond with reciprocal, proportional tariffs, likely on sorghum, livestock, and soybeans – a good in which China accounts for 1/3 of total exports. There has also been speculation that Boeing, which exports billions of dollars’ worth of airplanes to China ever year, may also be targeted for retaliation.
We will provide further details and analysis as more information becomes available. We will also lay out the comment and hearing process as soon as the product list is released.
March 16, 2018
Late this afternoon the Department of Commerce released its interim final rule for companies seeking product exemptions from the recently announced steel and aluminum tariffs.
The Interim Rule can be found here.
Exclusions may be granted, according to the rule, “if the Secretary determines the steel or aluminum article for which the exclusion is requested is not produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality or should be excluded based upon specific national security considerations.”
As we’ve mentioned in previous additions of this report, exemptions are only available for individuals or organizations undertaking business activities (construction, manufacturing, supplying steel to users, etc.) in the U.S. Exemptions will only extend to the individual or organization that files the specific request, unless otherwise stated by the Department of Commerce.
As exemptions to the steel and aluminum tariffs are being promulgated under a formal regulatory procedure, companies and individuals should be aware that all exclusion requests, as well objections to those requests, will be made public.
The exclusion forms can be found here, though please be aware that they will not be available until March 19 when the interim formal rule is officially published in the federal register.
Exclusion Requests must include:
- Request for Exclusion from Remedies Resulting from the Section 232 National Security Investigation of Imports of Steel form or Request for Exclusion from Remedies Resulting from the Section 232 National Security Investigation of Imports of Aluminum
- Business activities within the U.S. that the requestor is engaged
- The basis on which the exclusion is sought
Objections to Exclusion Requests must:
- Include the Response Form for Objections to Posted Section 232 Exclusion Requests – Steel or Response Form for Objections to Posted Section 232 Exclusion Requests – Aluminum.
- Identify and provide support for why the exclusion should not be granted
- Be filed no more than 30 days after the exclusion is posted
Notably, the rule states that product exemptions may take up to 90 days, meaning companies would be subject to the tariffs in the intervening period.
We will continue to monitor and provide updates.
March 12, 2018
Companies and countries across the globe are still coming to terms with the significant tariffs that the White House announced on steel and aluminum imports last week. The proclamations signed by the President were short on detail and, in the intervening days, additional details have been scarce. However, more clarification should be coming on or before March 18, the date by when the Secretary of Commerce is required to lay out the process for affected parties to seek exclusions from the tariffs.
It is important to note that requests for exclusion from these tariffs (utilizing this process) will be available only to affected parties within the U.S.; thus, individual countries would not be able to seek relief in this way. However, there may be additional details that pertain specifically to countries (like the ones laid out for the EU below). If the Administration waits until March 18 to issue the procedures, affected parties would be left with only five days to work through the process before the tariffs go into effect on March 23, as announced.
The tariff proclamations have led to public lobbying and threats of retaliation from some of the United States most important trading partners. Australia seems to be the first non-North American country to break through, as Prime Minister Turnbull tweeted that the country had received a “commitment from the President.” It is unclear, however, what form that commitment had taken or any concessions required to achieve it.
EU trade leaders have been less successful in their efforts. Attempts to hammer out a deal over the weekend failed. Malmström and USTR Lighthizer, the U.S. laid out five principles that could result in exclusion from the steel and aluminum tariffs. The principles include whether the country is a security partner for the U.S.; whether it participates in the steel excess capacity global forum; if the country imposes trade defense measures to prevent dumped steel from entering its market; if it supports U.S. disputes in the WTO; and the steel and aluminum trade volume between the U.S. and that country. However, more details about the specifics of the procedure were unclear.
Additionally, as the contentious meeting between the U.S. and the EU was taking place, President Trump once again threatened to put tariffs on European cars. He followed up that sentiment, as well as several promises to “tax Mercedes-Benz… tax BMW” at a campaign rally in Pennsylvania on Saturday, with a tweet today saying that Secretary Ross would be “speaking with representatives of the European Union about eliminating the large Tariffs and Barriers they use against the U.S.A. Not fair to our farmers and manufacturers.” This, of course, was not well received by EU officials including Trade Commissioner Cecilia Malmström who promised to “stand up to the bullies” who use trade “as a weapon to threaten and intimidate us.”
U.S. and EU officials have said that they will continue to work through the week to reach a resolution.
March 8, 2018
Today, the President signed a proclamation instructing the International Trade Commission to update the tariff schedule to reflect an increased 25% tariff on steel and 10% on aluminum, effective after 15 days.
Canada and Mexico have been given indefinite exclusions, and the Administration said other countries may negotiate with the United States if they would like an exemption, though at this time it is unclear precisely what that means. However, it does mean that there will be opportunities for countries to present their arguments to the Trump Administration, something that even a couple of days ago seemed unlikely.
The proposed tariffs have received vociferous support from domestic steel and aluminum producers and labor unions, but also have been met with sharp opposition from global investors and America’s trading partners worldwide.
To justify these tariffs and bypass Congress’ traditional role in regulating international trade, the Trump Administration has invoked Section 232 of the Trade Expansion Act of 1962. This relatively obscure law authorizes Secretary of Commerce Wilbur Ross to investigate to determine if the import of any foreign good or product is a threat to national security. If deemed a threat, the president can set tariffs on the good or product – in this case, steel and aluminum – without the consultation of Congress.
While the Trump Administration argues that the steel and aluminum tariffs’ implementation meets the national security threat requirement under Section 232, this rationale may fail to meet the separate national security standard established in Article XXI of the General Agreement on Tariffs and Trade (GATT). WTO members are likely to challenge the new tariffs. The WTO can authorize retaliation under the principle of reciprocity.
Typically, specialty-product imports have tariff treatment that has been carefully negotiated, and the Most Favored Nation (MFN) status of most of our import and export trade regime requires that the lowest tariff be offered to all our trading partners if it is offered to one.
The effects of the President’s proclamation will mean retaliation from U.S. trading partners. Their responses will be sharply focused to have maximum effect politically and economically. The European Union has a laundry list of items, totaling about $3.5 billion in American imports, that it is ready to place tariffs on- everything from peanut butter to bedspreads, t-shirts to orange juice, Harleys to cranberries. China is also rumored to be considering increased tariffs on a host of items.
The President’s action on tariffs has received uncharacteristically strong pushback from Republicans in Congress. Yesterday, 100+ House Republicans sent a letter to the White House expressing “deep concerns” about the proposed tariffs. Senate Majority Leader Mitch McConnell also said that he had a “high level of concern” about how the tariffs would impact the economy, and Senate Finance Committee Chairman Orrin Hatch wrote a letter citing his “very deep concerns” that the tariffs could undo the gains made through tax reform.
Democrats on the Hill also pushed back on both the need for and impact of tariffs on steel and aluminum. Senate Minority Leader Chuck Schumer (D-NY) had strong words for the “sweeping” tariffs and urged the President to focus on China. Additionally, the moderate New Democrat Coalition in the House also sent a letter calling for immediate hearings on the potential impacts of the action.
The effects of this announcement will mean higher prices for basic items in the U.S. economy – from beer cans to lumber to autos. The announcement is likely to have far-reaching impact on inflation and the overall economy.
Some other trade highlights:
- Frustrated Republicans Dread Legislative Response to Trump’s Tariff Proposal – Weekly Standard (3/6)
“Republicans in Congress are desperately trying to talk President Donald Trump down from his proposed tariffs, lest they have to consider a legislative check on the White House instead—a move that some lawmakers say isn’t feasible. House Speaker Paul Ryan pushed back on Monday against Trump’s plan to impose a 25-percent tariff on steel and a 10-percent tariff on aluminum. Most Republican lawmakers have been quick to oppose the proposed tariffs, which they fear could spark a trade war and cause harm to various American industries and consumers, as well as undermine the economic gains Republicans expect from their tax bill. The tariffs were put forward in the name of national security and supposedly are intended to punish China, but the White House has left it open that they could apply across the board, without exemptions for close trading partners or allies.”
“Less than three months after signing the first major tax reform bill in 31 years, President Trump has announced that the administration will impose a 25 percent tariff, or tax, on imported steel and a 10 percent tariff on imported aluminum. While the new taxes are intended to reduce the demand for imported goods, thus opening the market to domestic producers, the cost of these taxes will be borne initially by firms that buy the imported steel and aluminum, and eventually passed on to consumers through higher prices. While the administration has not released estimates on the magnitude of these new taxes, we estimate that they could cost U.S. firms nearly $9 billion if 2018 imports equal 2017 levels.
President Donald Trump tweeted that “trade wars are good, and easy to win,” adding that “when we are down $100 billion with a certain country and they get cute, don’t trade any more-we win big. It’s easy!” So, if you play that out a bit, looking at one of the countries we currently trade with, would we “win big” if we were to just stop trading with it?