Lawyer: Unclear If 10% Base Tariff Is Up for Negotiation

Jared Wessel said that the Court of International Trade didn't grant a temporary restraining order on any of the IEEPA tariffs because liquidation for the imports that had to pay tariffs is not final yet.

Still, "CIT litigation is moving very quickly," he said.

He explained that the major questions doctrine is that courts should not presume that the executive branch has major power to reshape the U.S. economy if the statute that the executive branch is using for its action doesn't explicitly endow that power. Given that IEEPA doesn't even include the word "tariff," and hasn't previously been used to hike tariffs, Wessel said, that doctrine might apply.

Wessel and his colleague Josh Gelula noted they were sharing their own views, not the opinion of their firm or clients.

Wessel said IEEPA may have appealed to the administration because it doesn't have the administrative hurdles that Section 232 and Section 301 lay out.

Wessel noted that the administration also is launching numerous Section 232 investigations on imports that may damage national security, including copper, pharmaceuticals, semiconductors and the finished goods that include them, critical minerals and the finished goods that include them, and lumber, and items made from wood.

Wessel chuckled as he said the lumber national security investigation is his favorite. He said it will be interesting to see how the report connects softwood lumber to national security.

A coffee importer on the webinar asked if there are any indications that the 10% tariffs would be lowered soon, and if so, for which countries?

Wessel said there's a "real debate" within the administration on whether they are willing to go below 10% on any country, or whether all the negotiations are only to avoid higher reciprocal tariffs. Although the tariff rates were set based on the trade deficit with each country, even countries that buy more U.S. goods than they export to the U.S. face a 10% tariff.

"Coffee is -- of course -- very interesting," Wessel said, since government officials do acknowledge that certain products cannot be produced at scale in the U.S., and coffee tends to be the example mentioned of that issue. He encouraged the importer to urge its customers and trade association to lobby the administration, and said they could also call their members of Congress. However, he added, "Congress has not taken as strong a role in trying to mediate trade policy in Trump II as they did in Trump I."

The presentation noted that foreign goods can only be entered into foreign-trade zones after paying applicable tariffs. In response to a question from International Trade Today about the future of FTZs, given these restrictions, Wessel said that clearly the administration doesn't want FTZs to be a method for tariff inversion. Traditionally, a manufacturer could import a part at 4%, use it to produce a good that faces a 2% tariff, and only pay 2% on the foreign value of the input once the finished good exited the FTZ.

Wessel said FTZs have survived because there's still value in using them as an export platform (though that's not accepted in Chile, Canada or Mexico).

He said there are still outstanding questions about what the country of origin is for a good that is produced inside an FTZ, and while the National Association of Foreign-Trade Zones has tried to raise that issue with the administration, he doesn't think it's been settled.

While most of the webinar dealt with the new tariffs since Donald Trump came back into office, Wessel reminded the listeners that antidumping and countervailing duties are not going away. He pointed out that the International Trade Commission has several vacancies and commissioners serving past the ends of their terms, so Trump could possibly appoint five of the six members of the ITC. The ITC decides whether domestic producers have been harmed by dumping or subsidies, and he said he expects Trump's picks will make it more likely that those cases succeed.