Sen. Chuck Grassley, R-Iowa, represents a state that exports lots of soybeans to China but remains critical of the U.S.'s largest trading partner in goods. He said he recently visited five cities in China with Agriculture Secretary Sonny Perdue and other senators. What he saw there convinced him that Chinese officials "will do anything legal or illegal, moral or immoral, ethical or unethical ... to get ahead and stay ahead." He added, "They are very strategic and we're very short-sighted." Grassley, speaking at a Senate Finance trade subcommittee hearing April 11 on access to China's market, said he's one of the only Congress members still in office who voted to allow China full membership in the World Trade Organization. "It hasn't turned out the way I anticipated," he said. "I kind of feel like I should feel sorry for my vote."
Misclassification and valuation are among areas of enforcement focus for CBP's administration of the Section 232 tariffs on steel and aluminum, CBP officials said during an April 10 interview. "Classification is a way to play with it, valuation as well, but these are things we will have to look at," said John Leonard, executive director of trade policy and programs at CBP. There are some different considerations involved for looking at possible transshipments because most antidumping or countervailing duty evasions involve countries around China, such as Malaysia or Thailand, but those countries are affected by the 232 tariffs too, he said. "It's hard to put it in that same context," he said.
A court challenge of any Section 301 tariffs imposed on China would be possible, but difficult, according to a Congressional Research Service report dated March 29. The Court of International Trade does have jurisdiction over Section 301 duties under 18 USC 1581(i), and has heard several cases on past Section 301 actions, the report said. But the challenger must clear a high bar to succeed, it said. Because Section 301 actions involve trade negotiations, the U.S. trade representative is given much deference by the court, possibly rendering USTR’s actions unreviewable under the Administrative Procedures Act, CRS said. “Because Section 301 investigations involve consultations with other countries and other foreign relations-related issues, a degree of discretion is afforded to the actions the USTR takes,” the report said. “What remains open to challenge before the courts, however, are allegations of statutory misinterpretations on the part of the USTR, violations of the statute’s procedures, actions that exceed the authority delegated to the USTR by statute, and similar claims,” it said.
International Trade Today is providing readers with some of the top stories for April 2-6 in case they were missed.
TVs imported from China could bear an especially heavy burden under the Office of the U.S. Trade Representative’s list of products targeted for 25 percent tariffs under the Trump administration's Section 301 investigation (see 1804040019). “This is a big impact on TV,” Bob O’Brien, president of Display Supply Chain Consultants, said in an interview. All products classified in Harmonized Tariff Schedule subheading 8528.72.64 would be prone to tariffs, “which is basically all TVs” imported from China, he said. He estimates 18.8 million TVs with a value of $3.9 billion were imported from China in 2017 under that classification. “This would have a huge impact on the TV supply chain.”
Soybeans, aircraft, cars and liquefied propane accounted for the largest dollar amounts of trade from the U.S. into China among goods that would be subject to new tariffs if the U.S. goes forward with Section 301 tariffs, the United Nations' International Trade Centre said in a tweet. China's list of goods potentially subject to new tariffs came in response to a U.S. proposal to add tariffs on $50 billion worth of Chinese goods (see 1804030070). President Donald Trump has since directed the Office of the U.S. Trade Representative to look into tariffs on another $100 billion worth of Chinese goods.
The House Ways and Means Committee will hold a hearing April 12 on how the Section 232 tariffs are affecting the economy and jobs and how proposed Section 301 tariffs might do the same, it said in a notice. "In enforcing our trade laws, we should always take a targeted approach to address unfair practices while avoiding harm to U.S. workers and job creators," Chairman Kevin Brady, R-Texas, said.
President Donald Trump tasked the Office of the U.S. Trade Representative with looking at adding another $100 billion in Chinese goods to the $50 billion already identified as part of the Section 301 investigation. "Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers," the White House said in a release. USTR promptly responded that tripling the size of the tariffs is appropriate, and promised to assemble a list. "Any additional tariffs proposed will be subject to a similar public comment process as the proposed tariffs" announced on April 3 and "no tariffs will go into effect until the respective process is completed," the agency said.
Both the U.S. proposal for Section 301 tariffs (see 1804040019) and the Chinese response (see 1804030070) are likely stage-setting for future negotiations, said Merrill Lynch analysts in an April 4 note to investors. "Despite the exchange of tariff threats, we believe there is still room for negotiation between the US and China," Helen Qiao and Sylvia Sheng said in the research note. "We maintain our view that China will continue its 'carrot and stick approach,' threatening retaliation but also proposing to expand its imports of US products, cut the auto duty, and ease restrictions for US companies investing and selling in China in negotiations," the analysts said. "As a result, we expect the final version of both the US and China trade measures to be more toned down relative to the initial announcement."
Flexport's clients would have paid about $13.6 million in additional customs duties if the proposed Section 301 tariffs (see 1804040019) were in place in 2017, the company's CEO Ryan Petersen said in a blog post. "While Flexport believes that global trade is absolutely essential to a free and prosperous society, our immediate focus in the coming weeks will be on the impact to our clients," he said. "We also believe these algorithmically chosen new taxes -- which were 'drafted to achieve the lowest consumer impact' -- are navigable by a resilient supply chain industry."