Two prominent Republicans questioned the suitability of switching tariffs for quotas because of currency manipulation in Brazil and Argentina, as President Donald Trump said Dec. 2 he is doing. Sen. Pat Toomey, R-Pa., the leading critic of Trump's trade policy, issued a statement that night that said, “He is justifying these tariffs by citing Section 232 of the Trade Expansion Act. This provision is exclusively meant for national security threats. Yet, the President has acknowledged that the real purpose of this action is to combat currency manipulation -- which does not pose a national security threat. Furthermore, even if this action were legitimate, the statutory window for imposing these tariffs has closed. These actions further underscore that Congress should take up my legislation that would reassert congressional authority regarding imposition of national security tariffs.”
A top dairy lobbying group announced that executives would be visiting Congress Dec. 4 in what they characterized as “a last-ditch effort to save this deal,” and Farmers for Free Trade sent a letter to the top Republican and top Democrat in each chamber asking that the vote on the U.S.-Mexico-Canada Agreement come as soon as possible. The letter, signed by 2,200 farmers around the country, was sent Dec. 3, and said that trade wars have hurt agriculture badly. “We have suffered from retaliatory tariffs, lost market share, and watched while America’s competitors are seen as more reliable trading partners. The reasons for this crisis are manifold but providing certainty about continued trade with two of our three largest export markets would provide America’s farmers and food manufacturers with a needed boost,” the letter said. “We are counting on our elected officials to champion the folks back home and appreciate your urgent action.”
A Mexican business group representing manufacturers, agriculture, banking and retailers says it is very concerned that certain labor demands from U.S. politicians in the U.S.-Mexico-Canada Agreement are extreme in nature “and are totally unacceptable,” the Consejo Coordinador Empresarial wrote in a press release Dec. 2, adding bold for emphasis. These proposals could severely affect Mexico's competitiveness, the CCE said. It also said “respect for Mexico's sovereignty is non-negotiable.”
For a second time, a World Trade Organization panel rejected the European Union's claim that it has ended launch subsidies for Airbus, and remedied their adverse effects on Boeing. The earlier compliance panel ruling against Airbus led to the largest authorized tariff action ever at the WTO -- the $7.5 billion worth of goods from EU countries facing either 10 percent or 25 percent tariffs (see 1910020044).
After a surprise tweet from President Donald Trump that he would implement tariffs on Brazilian steel and on Argentinian steel and aluminum (see 1912020002), the agency in charge of Section 232 actions declined to say when a Federal Register notice would follow to put the tweet into action. The department also declined to say if importers can bring in products in sectors where the quotas are already full while waiting for the Federal Register notice. Commerce also didn't say if importers can apply for exclusions for the items. Currently, exclusions against quotas are allowed, but they are not allowed to be taken until this quarter, even though the quotas fill up quarter-by-quarter.
When tariffs on their entire product line rose to 25 percent, small bike companies were faced with difficult decisions on raising prices and reducing staff. For Mehdi Farsi, co-founder of State Bicycle Co., a 10-year-old firm in Arizona, the financial burden meant he ended free shipping for online customers, then raised the price of the second-highest seller from $449 to $459. Shipping usually cost the company between $25 and $50, depending on the distance. He also didn't replace one person who left the company, and laid off one worker. Currently, including the owners, there are 15 workers, a couple of whom work only part time.
The Office of the U.S. Trade Representative announced that it will release a report from its Section 301 investigation on France's Digital Services Tax on Dec. 2. The Nov. 27 press release said that its recommendation of how to respond to the DST will be made at that time. Trade groups, companies and think tanks submitted comments and testified last summer about their problems with the DST (see 1908140023), but several said that tariffs on French imports under Section 301 are not the way to fix the problem. Many of France's most identifiable exports to the U.S. are already targets of tariffs because of the Airbus dispute.
Although the U.S. trade representative found a way to avoid a congressional vote on a U.S.-Japan trade deal by limiting the size of the initial U.S. tariff reductions, Democrats on the Ways and Means Committee are questioning whether the deal is allowed under the fast-track law. A letter sent Nov. 26, led by Rep. Bill Pascrell, D-N.J., and signed by every Democrat on the committee except the chairman and Rep. John Lewis, D-Ga., did not explicitly say that Democrats believe the law is not being followed, but repeatedly asked under what authority the agreement was reached. Among the specific issues raised were rules of origin or marking rules and whether there would be changes. The letter also asked if there is such a provision, why wasn't it mentioned in the notification to Congress.
While the National Customs Brokers & Forwarders Association of America is asking for the renewed Craft Beverage Modernization Act to simplify the process of applying for the lower excise taxes on imports, the break for small producers of beer, wine and spirits may be gone entirely in a little more than a month. The CBMA was included in broader tax reform legislation in 2017 (see 1712180033).
House Speaker Nancy Pelosi said the Democrats “are within range” of agreeing on a new NAFTA, adding that “we need to see our progress in writing from the Trade Representative for final review.” Pelosi released the statement in the evening of Nov. 25. She said that the original draft of the U.S.-Mexico-Canada Agreement that USTR reached with Canada and Mexico “still left American workers exposed to losing their jobs to Mexico, included unacceptable provisions to lock in high prescription drug prices, and fell short of key environmental standards,” but most of all, it had no concrete enforcement mechanisms. If Pelosi reaches agreement with USTR, the next step will be a draft implementing bill from USTR, and mock markups in the House Ways and Means Committee and Senate Finance Committee to shape the final bill.