Usually tariff issues are taken up in the Senate Finance Committee, but the Senate Labor Committee examined recent trade policies during a Sept. 5 hearing. Labor ranking member Patty Murray, D-Wash., noted the committee has an interest because of the effect on workers. "[President Donald] Trump is playing a dangerous game right now, and workers are paying the price," she said.
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.
The "agreed outcomes" to the U.S.-Korea Free Trade Agreement were published by the U.S. Trade Representative on Labor Day, and they lay out the language changes put in place to protect the U.S. light truck market from Korean imports for another 20 years. In the original KORUS, agreed to in 2011, the 25 percent tariff on light trucks would last until 2021. In the renegotiated KORUS, they last through 2041. "The publication of the text of the agreed outcomes follows the completion in mid-August of U.S. domestic consultation procedures," said the USTR in a news release. "Korea will now initiate the next step in its own domestic procedures, which is to open for public comment the provisional Korean translations of the outcomes to amend the KORUS Agreement."
The International Trade Commission recently issued Revision 11 to the Harmonized Tariff Schedule. Changes include those required to implement new exemptions from absolute quotas on steel from Argentina, Brazil and South Korea, and aluminum from Argentina, imposed as part of those countries’ deals to escape Section 232 tariffs (see 1808300004). Those changes take effect Aug. 30. The updated HTS also includes amendments effective Sept. 1 to rules of origin under the U.S.-Bahrain Free Trade Agreement. Finally, the recently revised subheading 9705.00.0085, which since July 1 has covered “zoological, botanical, mineralogical, anatomical, historical and paleontological pieces,” now refers more broadly to “other” collections or collectors’ pieces (i..e, other than numismatic, archaeological or ethnographic pieces). That change takes effect retroactively to July 1.
The White House on Aug. 29 issued proclamations expanding company-specific exclusions from Section 232 tariffs and quotas on steel and aluminum. The proclamations make exclusions from Section 232 tariffs retroactive to the date the exclusion request was "accepted," rather than the date of posting, by the Commerce Department. They also authorize Commerce to grant exclusions for products from countries constrained by Section 232 quotas on steel and aluminum (currently Argentina for steel and aluminum, and South Korea and Brazil just for steel).
Sen. Elizabeth Warren, D-Mass., called on the Commerce Department Inspector General to investigate the process for receiving company-specific requests for exclusions from Section 232 tariffs on steel and aluminum. “Commerce officials claimed that the exemption process would be 'fair and transparent,'" her office said in an Aug. 29 press release. “But an investigation by Senator Warren and additional public reporting have revealed the process is replete with mistakes and appears arbitrary, opaque and subject to political favoritism,” she said, citing an exclusion granted to a sanctioned Russian aluminum company. Among other things, Warren asked in her letter that the IG examine the "processes and procedures in place for Commerce officials to make" decisions on tariff exemptions.
Several trade lawyers see Chapter 19, dairy and steel and aluminum tariffs as the thorniest issues to resolve as Canada is invited to negotiate NAFTA this week. Dan Ujczo, chairman of the U.S.-Canada practice at Dickinson Wright, said that Mexico is considering agreeing to voluntary quotas in steel and aluminum, but that an agreement is "highly unlikely" this week, before the bilateral deal is forwarded to Congress on Aug. 31. "Canada may be able to raise the issue in its discussions; however, progress will be unlikely, given the long list of issues," he wrote in a note to clients. He predicted that the end of aluminum and steel tariffs on NAFTA partners -- and the dropping of their retaliatory tariffs -- will happen during the 90-day review in Congress.
The House could pass the Miscellaneous Tariff Bill in the first week or so following a return from recess after Labor Day "if they think that they can get it passed and get it through the president to sign," said Jon Kent, a lobbyist for the National Customs Brokers & Forwarders Association of America with Kent & O'Connor. One potential issue could be inconsistency concerns within the administration over tariff cuts on many goods that come from China as other tariffs are being added under Section 301 and other trade remedies, Kent said.
The National Association of Foreign-Trade Zones recently wrote to Foreign-Trade Zones Board Executive Secretary Andrew McGilvray as part of the group's effort to address the "unintended and injurious impact" of section 201 and 301 tariffs on manufacturers in U.S. FTZs. NAFTZ is trying to get the Office of the U.S. Trade Representative to resolve issues involving the USTR's trade remedy language that results in unfair treatment of goods manufactured within FTZs (see 1808220034). "We respectfully request that the Foreign-Trade Zones Board communicate immediately with USTR to help resolve this increasingly-damaging situation for American FTZ manufacturers," he said.
CBP's 'Hands Tied,' So NAFTZ Engaging USTR on Section 301 Tariffs for Some US FTZ-Manufactured Goods
National Association of Foreign-Trade Zones President Erik Autor is set to meet with officials at the Office of the U.S. Trade Representative in the coming weeks to discuss a quirk in foreign-trade zone filing requirements that’s resulting in the unfair application of Section 301 duties, he said in an Aug. 21 interview. Autor seeks to educate USTR on how tariffs apply to FTZ goods, in the hopes that the agency will amend Section 301 implementation language related to zones that CBP says leaves it with no choice but to sometimes collect the tariffs on inputs that sometimes aren’t even Chinese.
Australia's exemption from Section 232 tariffs (see 1805310007) involves a deal in which CBP constantly monitors imports from the country, according to a report from Inside U.S. Trade on Aug. 20. John Leonard, executive director-trade policy and programs, briefly mentioned the arrangement during a meeting with reporters on Aug. 14. Australia was give "a special exemption from both tariffs and quota, but we're still monitoring imports from Australia," he said.