The European Council approved a negotiating mandate for trade talks with the U.S., but says it will not finish a free-trade agreement until the steel and aluminum tariffs on its member countries are lifted. The mandate, which was approved April 15, excludes agricultural trade from the talks.
Section 232 Tariffs
The United States currently maintains a 25% tariff on steel imports and 10% on tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962. In 2018, the Trump administration imposed Section 232 Tariffs on steel and aluminum imports into the United States, citing national security concerns. The U.S. agreed to lift tariffs on Canada and Mexico after the signing of the United States-Mexico-Canada Agreement (USMCA), and reached deals with the European Union, Japan and other countries to replace the tariffs with quotas for steel and aluminum imports into the U.S.
Mexico's Economy Secretary Graciela Márquez, according to a readout supplied by the Mexican government on April 12, asked Commerce Secretary Wilbur Ross to work toward reaching an agreement on a new tomato suspension agreement as quickly as possible (see 1902070024). The release said both officials agreed that Commerce is seeking to negotiate an agreement that is in the interests of both countries.
Now that the World Trade Organization has ruled that Russia was justified in blocking transit of Ukrainian goods across its territory under the General Agreement on Tariffs and Trade's national security exception, lawyers are trying to project how a different panel will view the U.S. use of the same rationale for its steel and aluminum tariffs.
Toyota does support the renegotiated NAFTA, a top executive said at a trade conference in Washington, even though it will require the company to change some of its sourcing to meet the new 75 percent autos rule of origin. Doug Murtha, vice president of corporate strategy and planning for Toyota's North American division, said that the addition of $3 billion in U.S investments were, "to some extent, changes we had to make for USMCA."
The sole U.S. producer of titanium sponge, TIMET, argued to the Commerce Department that two Japanese companies and TIMET should be given a price advantage and that all other countries' producers should be restricted through quotas or tariffs that are not subject to drawback. TIMET, which failed to win an antidumping case because the International Trade Commission said its production was not in direct competition with imports used by other U.S. processors, is asking for a preference pricing scheme, similar to those used in suspension agreements for antidumping cases.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, told reporters that if President Donald Trump were to hike tariffs in violation of what was negotiated in the U.S.-Mexico-Canada Agreement, as he threatened to do, it could blow up the treaty. "More tariffs would create more problems," Grassley said April 10, and he noted the steel and aluminum tariffs are already a major obstacle. "The Congress of the United States won’t bring up that agreement until the tariffs are off," he said.
The Office of the U.S. Trade Representative's proposal to tariff up to $11 billion worth of goods from the EU as part of a long-running dispute over aircraft subsidies (see 1904090031) adds some new tension to an already fraught trade relationship. Although the trade dispute resolution that the U.S. is asking for pertains to large commercial airplanes, it goes far beyond aerospace, hitting cheeses and other food, wine, clothing and building materials. “This case has been in litigation for 14 years, and the time has come for action. The Administration is preparing to respond immediately when the WTO issues its finding on the value of U.S. countermeasures,” USTR Robert Lighthizer said in a news release.
Rep. Lizzie Fletcher, who defeated a nine-term Republican incumbent last fall, is clear that NAFTA has benefited her district in the Houston area and the whole state of Texas. But Fletcher, who has been chosen as a co-chair of the trade task force in the New Democrats caucus, said she's not being urged by constituents to get NAFTA's replacement ratified as soon as possible.
The Mexican undersecretary for North American affairs, who was the current administrator's chief negotiator in the NAFTA renegotiations, said as he meets with Democrats in Congress, "we are making progress" in convincing them that the labor reforms under consideration in Mexico are very strong. Jesus Seade, speaking at a press conference April 4 at the Mexican Embassy, added, "It doesn't mean that anybody asked, 'Seade, where do I sign?'"
The Trump administration clearly underestimated the number of product exclusion requests that would be filed under the Section 232 steel and aluminum tariffs, said Deputy Assistant Secretary of Commerce for Export Administration Matthew Borman, during an April 2 Senate Appropriations subcommittee hearing on the Commerce Department’s 2019 budget request. Borman said Commerce’s prediction was based on the number of exclusion requests it received during a “steel safeguard action” taken during 2001. Borman said that about 6,000 requests were submitted then. “Obviously there turned out to be quite a few more in the current process,” Borman said, adding that Commerce has processed more than 45,000 of the estimated 85,000 exclusion requests it has received.