U.S. Trade Representative (USTR)

The Consumer Technology Association wants the Office of the U.S. Trade Representative to remove 54 tariff lines from the list of imports from China targeted for a second tranche of 25 percent Trade Act Section 301 duties, said Sage Chandler, vice president-international trade, in comments filed July 23 in docket USTR-2018-0018. Chandler also testified at the USTR’s public hearing on July 24. The 54 tariff lines were well more than double the 22 Harmonized Tariff Schedule product codes that Chandler said CTA members had identified nearly four weeks ago for exclusion from the new list of duties (see 1807100025). Tariffs on the proposed products “will harm the very industries they seek to protect, all while failing to influence China's behavior or help the administration's stated goal of eliminating China’s discriminatory trade practices,” Chandler said in her latest comments.

It’s “difficult to read the tea leaves,” or “glean” any lessons, from why the Office of the U.S. Trade Representative removed certain tariff lines from the initial list of Section 301 tariffs, said David Cohen, a lawyer with Sandler Travis, during Sports & Fitness Industry Association (SFIA) webinar July 18. The USTR on June 15 announced it deleted 40 percent of the product lines from its first list of proposed Section 301 tariffs on Chinese imports (see 1806150003). The rationale behind those changes isn't apparent, he said.

The retaliatory tariffs from the European Union, China, Canada, Mexico and Turkey in response to U.S. steel and aluminum tariffs are being challenged at the World Trade Organization by the Office of the U.S. Trade Representative. "The U.S. steel and aluminum duties imposed by President Trump earlier this year are justified under international agreements the United States and its trading partners have approved," the USTR said in a July 16 news release. "However, retaliatory duties on U.S. exports imposed by China, the EU, Canada, Mexico and Turkey are completely without justification under international rules.

Most of the computer, aviation and automotive, electrical and machinery products that will be hit by tariffs under Section 301 are produced by foreign companies operating in China, according to an updated study from the Peterson Institute for International Economics. The think tank says it aims to do "truth telling about the benefits of globalization" as well as study labor market adjustment due to globalization and how to find a sustainable growth model for mature economies.

The reactions from industry and Capitol Hill on the Section 301 tariffs were largely split along lines previously drawn over the Trump administration's general approach to tariffs. House Ways and Means Committee Chairman Kevin Brady, R-Texas, said in a news release that while the changes from the initial list of products from China were "encouraging, " he is "alarmed that additional products are now placed on the list for possible future action." Brady called on the Office of the U.S. Trade Representative to "narrow these tariffs and implement an effective exclusion process that provides relief for American companies, unlike the problematic Commerce 232 exclusion process.”

The International Trade Commission is launching an investigation into possible additions and removals of products from the Generalized System of Preferences program, it said in a May 23 press release. Conducted in response to a request from the U.S. trade representative, the investigation will inform USTR’s decisions on product eligibility in the ongoing 2017-18 GSP annual review. ITC and the USTR will also in the review consider whether to grant requests for de minimis and competitive need limitations waivers.

Now that it is seemingly too late for Congress to ratify a new NAFTA in December (see 1805110025), predictions about what happens next vary widely. Treasury Secretary Stephen Mnuchin said on CNBC that the administration could pursue a "skinny NAFTA," and a Republican senator suggested that would be the best course of action, though a full rewrite is still preferred, Mnuchin said.

On May 17, the supposed deadline for having a NAFTA deal ready so that Congress could vote on it in 2018, the U.S. Trade Representative said ratifying a deal this year is unlikely. Earlier that day Canada's Prime Minister Justin Trudeau, speaking in New York, said, "We're down to a point where there is a good deal on the table. Mexico has put proposals on the table that actually will go a long way towards reducing the trade deficit the U.S. has with Mexico, and indeed, bringing back some auto jobs from Mexico to the United States. It's right down to sort of the last conversations."

A World Trade Organization appellate body recently found the European Union is not complying with some aspects of earlier WTO decisions against subsidies provided to Airbus, setting the stage for U.S. tariff retaliation unless the EU takes steps to come into compliance. Finally bringing to a close a WTO challenge brought by the U.S. in 2004, the WTO appellate body held the EU has continued to provide illegal subsidies during the period after the WTO found them in violation of WTO agreements.

South Dakota-based Daktronics, a manufacturer of LED display systems for large-screen digital signage, wants U.S. Trade Representative Robert Lighthizer to impose 25 percent tariffs on imports of Chinese LED display screens and “the main assemblies” of LED panels and modules, the company said in a March 23 letter to Sen. John Thune, R-S.D., which Thune forwarded to the USTR’s office. The letter posted Friday in docket USTR-2018-0005 predated by about two weeks release of the USTR’s list of products targeted for the tariffs. The list included LEDs and LED-related components, but not LED display screens or modules. In the past decade, “we have seen increasing unfair competition from Chinese imports and a decrease in USA manufacturers,” Daktronics said. U.S.-based manufacturers of “complete video display systems” number only about five companies, but in China, “there are several thousand,” it said. “This seemingly government-backed excess capacity in China drives the product prices down and makes it feasible to import their products into the USA,” but at “artificially low prices,” and of questionable quality, it said. The tariffs would benefit U.S. display makers because “our investments in Development and Capacity stay here in the USA,” it said. “We need to move quickly, there aren't many of us left!” Thune asked USTR to “give careful consideration to the proposed tariffs set out in the company's letter.” Comments on the proposed tariffs are due Friday as a prelude to a May 15 hearing.