Lawyer: Section 301 Ship Fees Come Next Week; Expect Taiwan, Australia to Be Spared Reciprocal Tariffs

"I would say, as of today, I think it is likely it will continue," Ujczo said on a webinar March 27 with the Automotive Industry Action Group. "But who knows?"

He said a best-case scenario would be that goods eligible for USMCA benefits continue to be carved out from those original duties on Canada and Mexico, and those tariffs, which were levied under the International Emergency Economic Powers Act, or IEEPA, and the reciprocal tariffs merge, but auto and steel tariffs are added to that base tariff.

"I still think it’s a low likelihood that happens."

If there are adjustments to the IEEPA tariffs, "don’t be surprised if Mexico is treated a little bit better than Canada," he said.

Ujczo, who's an attorney at Thompson Hine in Columbus, Ohio, but noted he was not speaking for the firm or its clients, said no one knows if the administration will use IEEPA, the section on balance of payments in the 1974 trade law, or Section 338 of the Tariff Act of 1930, which allows the president to impose tariffs on trading partners of up to 50% over discriminatory behavior.

If it is the balance of payments law, a public hearing is required ahead of the action, it cannot exceed 15%, and it can only last for 150 days. That law is most closely linked to foreign countries' trade surpluses Trump complains about, but the balance of payments refers to both trade deficits and foreign investment, not just trade deficits. It requires the president to consult with Congress ahead of the imposition of tariffs and allows him to carve out goods where there is no domestic availability "at reasonable prices," or to carve out raw materials, or avoid tariffs that would cause "serious dislocations in the supply of imported goods."

Ujczo said that using IEEPA to impose tariffs is on "pretty shaky legal ground" and said that there are challenges ready to be filed if IEEPA is used.

He said the creation of the External Revenue Service will be announced next week, along with the tariffs. While some have questioned the need for an ERS, given that CBP already collects tariffs, Ujczo said the new department will allow the administration to use those revenues however it likes.

He said an order on fees for ships arriving in U.S. ports, under the Section 301 investigation on Chinese subsidies for shipbuilding, also will be released next week.

In order to discourage ships from dropping off U.S.-bound cargo in Mexico or Canada, Ujczo said, part of that order will impose harbor maintenance taxes on goods crossing at land border ports of entry. He did not elaborate on how CBP would know these were goods merely transiting Canada and Mexico.

But no matter what authority Trump uses to impose tariffs, what's clear is that foreign countries are trying to make changes to their trade policies to curry favor.

"The second quarter is all about making deals," he said. "Just yesterday, Vietnam reduced tariffs, India’s been reducing tariffs ... . We’ve seen announcements on foreign investments."

"What we’re hearing out of the White House is ... we want everybody on a burning platform" as they seek to negotiate.

He said he doesn't think the end game for Trump is to liberalize trade on both sides, however. While he expects countries to lower their export barriers, Trump is also likely to seek either voluntary export restraints, or impose quotas. He said many countries will offer to buy agricultural products and LNG. He thinks those kinds of deals will roll back the broad tariffs.

"Of all of the things that are coming, the sectoral tariffs are probably the things that will be most permanent," he said.

However, he said he doesn't expect 25% tariffs on Canadian and Mexican steel and aluminum to last for years. "Look, the end game on steel and aluminum tariffs, particularly with Canada and Mexico, is to reset those quotas, increased monitoring and enforcement," he said.

He said he doesn't know what number Trump will put on reciprocal tariffs, but said that the top 15 countries with trade deficits will likely not be the exact "Dirty 15" referred to by Treasury Secretary Scott Bessent. Ujczo said that Australia, which is #15, is highly likely to avoid reciprocal tariffs, and he expects Taiwan to be spared, too.

Instead, he expects France and Indonesia to be targeted.

"What do you do with the Netherlands and Belgium and Spain," he asked, all of which buy more U.S. goods than they export to the U.S. "Is it going to be one number for the EU or not? Hungary has been going around and telling people that they’re getting a deal. What happens if Hungary or the Poles get a deal? Does the EU allow countries to cut their own deals with the United States?"

He also noted that the 2019 report from Peter Navarro on reciprocal trade didn't cover Canada at all, since most trade with Canada is zero tariffs. That report noted that for 67% of six-digit Harmonized Tariff Schedule categories, trading partners have higher tariffs, and for 20% of tariff categories, the U.S. has higher rates. For 13%, both countries have zero rates. For products where trading partners have higher rates, the average differential is 12%.

"I think if the U.S. goes hard and heavy on April 2, you will see more retaliation around the world," Ujczo said.