Importers paid more than $6 billion total in tariffs in October, the first full month that there were additional tariffs on $200 billion in Chinese goods, according to an analysis from Tariffs Hurt the Heartland. The group said that amount -- which is $3.1 billion more than was paid in October 2017 -- has not slowed imports on the tariffed goods, but has drastically cut exports that are subject to retaliatory tariffs. The group is funded in part by farm interests, who have been particularly hard-hit by retaliation. Their Dec. 7 release said that imports subject to new tariffs declined 0.6 percent in October, while exports targeted for retaliation fell 37 percent. About two-thirds of the increase is for Section 301 tariffs, while steel and aluminum tariffs cost an additional $446 million. The goods on the Section 301 list would have cost $394 million in tariffs before the action; in October, tariffs on those imports were $2.6 billion. CBP recently said it has assessed more than $10 billion under the recent Trump administration Section 201, 232 and 301 trade remedies (see 1811260010).
October imports at major U.S. retail ports exceeded 2 million containers in a single month for the first time as retailers continued to rush merchandise into the country ahead of the now-postponed Jan.1 increase in Section 301 tariffs on goods from China, the National Retail Federation said. President Donald Trump “declared a temporary truce in the trade war” when he put a 90-day hold on hiking the 10 percent tariffs to 25 percent, but “these imports came in before that announcement was made,” NRF said. “We hope that the temporary stand-down becomes permanent, but in the meantime there has been a rush to bring merchandise in before existing tariffs go up or new ones can be imposed.” U.S. ports handled 2.04 million 20-foot containers or their equivalents in October, the latest month for which after-the-fact numbers are available, NRF said. That was up 9 percent from September and up 13.6 percent year-over-year, it said. The previous single-month record, 1.9 million containers, was set in July, it said. NRF estimates ports handled 2.01 million containers in November, a 14 percent year-over-year increase. It forecasts 21.8 million containers will be handled in 2018, a 6.5 percent increase from the record 20.5 million handled in 2017. It sees a “significant slowdown” in 2019 import growth “as the market adjusts to higher prices due to the Trump tariffs and the impact on consumer and industry confidence going forward.”
Increased material costs was the top cost pressure for 20 percent of CEOs surveyed by the Business Roundtable, and that group's leader said tariffs are the reason why. Only labor costs was mentioned by more CEOs. Business Roundtable CEO Josh Bolten said that while the survey, released Dec. 7, didn't ask which set of tariffs is the problem, he's hearing from companies that metals tariffs are a bigger burden than the Section 301 tariffs. That's because a relatively small amount of production uses inputs from lists one and two of Chinese imports, and steel is used in many sectors. "The ones that have gotten the biggest public attention are the auto manufacturers," he said, "but really it's across the membership."
A withdrawal of the U.S. from NAFTA by President Donald Trump could help push the new NAFTA through Congress, according to Sen. Chuck Grassley, the Iowa Republican who will take over the Senate Finance Committee next year. Grassley, who was speaking on an agriculture radio program on Dec. 3, also praised the president's approach to trade more broadly.
International Trade Today is providing readers with some of the top stories for Nov. 26-30 in case they were missed.
A 90-day pause in implementing increased Section 301 tariffs will run from Dec. 1, the White House said as it corrected the record the evening of Dec. 3. National Economic Council Director Larry Kudlow had erroneously said that the 90-day delay in increasing tariffs on $200 billion in Chinese imports would start Jan. 1. That was the day that tariffs were scheduled to rise from an additional 10 percent on the base rate to 25 percent. Jennifer Hillman, a Georgetown Law professor and former general counsel at the Office of the United States Trade Representative, tweeted that the Federal Register will have to be updated to reflect the new deadline, which should fall around March 1.
Importers need to be ready to defend to CBP any changes in country of origin that moves a product outside the Section 301 tariffs on goods from China, said Doug Zuvich, a partner in KPMG's Trade and Customs Services group. Zuvich, a former customs auditor, and others at KPMG discussed rules of origin during a Nov. 30 webinar. "It's really important to know the mindset from Customs, that they're going to come at this most likely thinking the worst," Zuvich said.
Section 301 tariffs on certain Chinese goods will remain at 10 percent after Jan. 1, after President Donald Trump and Chinese President Xi Jinping reached a deal to suspend the tariff increase, said the White House in a statement. Under the agreement, concluded Dec. 1 at the G20 summit in Buenos Aires, China will purchase “a not yet agreed upon, but very substantial” amount of agricultural, energy and industrial goods.
With the U.S. “on the cusp” of Section 301 tariffs scheduled to rise to 25 percent Jan. 1, 2019, on $200 billion worth of Chinese imports, President Donald Trump “has taken the authority that he does not have under the law” when he ordered the imposition of the duties, Consumer Technology Association President Gary Shapiro told the American Legislative Exchange Council’s States & Nation Policy Summit on Nov. 29. Speaking before an audience of mainly conservative state legislators, Shapiro stopped well short of threatening a CTA court challenge to block the higher tariffs from taking effect (see 1811090044).
The tariffs will hurt “thousands” of American tech companies, but also “our farmers and others as China is retaliating,” Shapiro said. “I travel around the world. I talk to government leaders. This is just not a China-U.S. issue. Every developed country in the world is concerned about this tariff war, which can not only lead us into a recession, but potentially a depression.” By imposing the tariffs, the administration is “going against” the American “brand of freedom” in trade and the “welcoming in” of foreign trade partners, Shapiro said. He conceded that China “is not a fair player, by the way. But raising tariffs, in our view, is not the way” to curb China’s unfair trade practices, he said. CTA didn’t comment.
President Donald Trump should not back down from taking further action against China should the country fail to make real concessions just to get a “meaningless” deal done at the upcoming G-20 Conference in Buenos Aires, said a group of prominent Democratic senators in a letter dated Nov. 28. “China has not offered to make any structural reforms to their trade practices regarding the use of government subsidies to boost its emerging industries, technology transfers, and espionage,” said a statement released alongside the letter, citing a report in The New York Times. “We urge you to stand firm against China if meaningful concessions are not made. American jobs, American innovation, and long-term American economic prosperity are at stake,” said the letter, signed by Senate Majority Leader Chuck Schumer, D-N.Y., as well as Sen. Sherrod Brown, D-Ohio, and Sen. Ron Wyden, D-Ore. Section 301 tariffs against China are scheduled to rise to 25 percent on Jan. 1, 2019, unless Trump directs otherwise.