Section 301 tariffs raised IBM's sourcing costs by tens of millions of dollars, and on Dec. 2 the company asked the incoming administration to “immediately” remove the tariffs on tech inputs such as mechanical parts, fans, power distribution units, power supplies, cables and printed circuit board assemblies. “A limited, early removal of the most counter-productive of the China tariffs could provide relief for U.S. manufacturing, while leaving the new Administration space to negotiate further tariff changes based on Chinese market access commitments,” said Alan Kohlscheen, IBM's import compliance executive, and Michael DiPaula-Coyle, IBM's director of international trade policy.
The Coalition for a Prosperous America published advice to the transitioning Joe Biden administration, which includes a call to continue and intensify the kind of tariff and sanctions policies used by the Trump administration, and to go further, such as by raising the bound tariffs at the World Trade Organization. The CPA also asked for countrywide withhold release orders for forced labor, a reduction of the $800 de minimis level and a change in the makeup of the Commercial Customs Operations Advisory Committee. “The membership of COAC should equal representation by domestic businesses and labor harmed by unlawful imports, rather than being dominated by multinationals and importer interests,” they said.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said stakeholders are telling him they appreciate his 16-month Generalized System of Preferences benefits program renewal, and that those same groups are pushing back on Democrats' desires to make revisions to eligibility requirements. Grassley said that he hasn't spoken directly to House Ways and Means Chairman Richard Neal, D-Mass., but that the trade staffs are telling him that Neal and Finance ranking member Sen. Ron Wyden's trade staff are frustrated by the GSP advocates' criticisms. He said stakeholders are telling Democrats that they are “using the GSP expiration as a hostage to achieve Democratic trade priorities,” and said he agreed with that argument.
Sen. Rob Portman, R-Ohio, an author of a temporary two-year reduction in the alcohol excise tax for small producers, is arguing that the businesses deserve the break in perpetuity. The original Craft Beverage Modernization and Tax Reform Act reduced the tax for two years, and a one-year extension expires at the end of this year.
Lobbying disclosure reports show a lot of corporate interest in the Uyghur Forced Labor Prevention Act. The National Retail Federation, the Retail Industry Leaders Association, the American Apparel and Footwear Association, the U.S. Chamber of Commerce, Plumbing Manufacturers International, and many companies, including Nike, Apple, Engie North America, Kraft Heinz, Campbell Soup and VF have been lobbying on the bill, which passed the House almost unanimously and is awaiting a Senate vote. The law would create a presumption that any goods from China's Xinjiang province were made with forced labor. The AFL-CIO and the American Foundry Society also have been lobbying on the bill.
After France began sending collection notices to internet companies last week for its new Digital Service Tax, according to a report in Financial Times, the U.S. and France seem headed for a collision course on taxes and tariffs. The Office of the U.S. Trade Representative has identified $1.3 billion worth of imports -- primarily handbags and cosmetics -- that would be hit with a 25% tariff, but delayed collecting them since France also delayed implementing the DST (see 2007130043).
Rep. Adrian Smith, R-Neb., wrote a column arguing in favor of reauthorizing the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill before they expire at the end of the year. “Renewing these programs, which have enjoyed bipartisan support, will reduce costs and uncertainty for American businesses as they continue to grapple with the effects of COVID," he said. "GSP benefits all Americans by promoting economic growth in developing countries while also providing a tool for the U.S. to encourage good practices like protecting intellectual property, providing reasonable market access to U.S. exports, and treating U.S. investors fairly. Letting GSP lapse would raise the average tariff by 3.5 percent for small businesses in Nebraska while decreasing our leverage to ensure developing nations are raising standards and playing fairly in the global marketplace.”
Although members of Congress have complained that Canada's tariff rate quota changes do not comply with USMCA commitments (see 2008280003), a Nov. 20 Congressional Research Service update on USMCA's agricultural provisions says that dairy exports to Canada in the third quarter of 2020 were 10% higher than in the third quarter of 2019 and 9% above the same period in 2018. It also noted that after four years of decline of U.S. exports of poultry and eggs to Canada, poultry meat exports grew 8% in the third quarter this year compared with the same quarter in 2019, but were only 3% higher than in the third quarter of 2018. Egg exports were flat.
Former U.S. Trade Representative Susan Schwab said that although President-elect Joe Biden has signaled that trade is not a priority for him, he is unlikely to be able to put it on the back burner completely until the COVID-19 crisis and economic recession are resolved. “Trade is going to come to them even if they don’t necessarily want to go to trade,” she said during a Peterson Institute for International Economics Trade Talks interview Nov. 24. When Biden is at a G-7 or G-20 meeting, and other heads of state bring up trade, “What are you going to do? Say, 'I'm not going to do trade for the next two or three years'? So, you can’t underestimate what happens when [India's] Prime Minister [Narendra] Modi wants to talk to you about trade. Or [China's President] Xi Jinping wants to talk to you about trade. Or [German Chancellor] Angela Merkel wants to talk to you about trade.”
With President-elect Joe Biden said to be reluctant to commit to changing 25% tariffs on $250 million worth of imports from China, a recent Congressional Research Service report contains suggestions that could point to a possible off-ramp. The report, released Nov. 23, says that Section 301 actions terminate automatically after four years, unless the Office of the U.S. Trade Representative receives a request for continuation, and conducts a review that determines the tariffs should continue.