White House Said to Prepare Tariffs on Chinese Goods

Friday, March 16, 2018



According to news reports this week, the White House is preparing to impose tariffs on tens of billions of dollars’ worth of Chinese imports in connection with the Administration’s Section 301 investigation into Chinese policies and practices relating to forced technology transfer and intellectual property.

Politico reported that “U.S. Trade Representative Robert Lighthizer presented Trump with a package of tariffs that would target the equivalent of $30 billion a year in Chinese imports. In response, Trump urged Lighthizer to aim for an even bigger number — and he instructed administration officials to be ready for a formal announcement in the coming weeks, according to two people involved in the administration’s trade deliberations.” According to this account, the exchange took place last week.

Reuters separately reported that the U.S. action could come “in the very near future.” While the tariffs may target information technology, consumer electronics, and telecoms, they could be much broader, and the list could eventually run to 100 products, according to the same account.

Addressing the issue, U.S. Chamber President and CEO Thomas J. Donohue on March 15 issued the following statement:

“The administration is right to focus on the negative economic impact of China’s industrial policies and unfair trade practices, but the U.S. Chamber would strongly disagree with a decision to impose sweeping tariffs.

“Simply put, tariffs are damaging taxes on American consumers. Tariffs of $30 billion a year would wipe out over a third of the savings American families received from the doubling of the standard deduction in tax reform. If the tariffs reach $60 billion, which has been rumored, the impact would be even more devastating.

“As we’re starting to see, tariffs could lead to a destructive trade war with serious consequences for U.S. economic growth and job creation. The livelihood of America’s consumers, businesses, farmers, and ranchers are at risk if the administration proceeds with this plan.

“We urge the administration to not impose these tariffs and to work with the business community to resolve the real and justifiable concerns raised by Chinese trade practices.”

Lighthizer, Ross to Testify Before Congress Next Week

U.S. Trade Representative Robert Lighthizer will testify before the House Ways and Means and Senate Finance committees on the president’s trade agenda on March 21 and 22, respectively. Commerce Secretary Wilbur Ross will appear before the Ways and Means Committee on March 22.

Chairman Brady said in a statement announcing the hearing with Lighthizer:

“Given Congress’ Constitutional authority over our nation’s trade policies, our relationship with USTR is crucial. We want to work together with the Administration to implement sound trade policies that help our American workers and job creators. This includes bringing important trade agreements – like NAFTA – into the 21st century, as well as ensuring that the President’s recently announced steel and aluminum tariffs are targeted to address national security and unfair trade while not harming other sectors of our economy.”

For further information about the first of these hearings, click here.

Few Exclusions to Steel, Aluminum Tariffs Expected

U.S. businesses seeking to avoid tariffs on steel and aluminum imports are expected to face resistance under rules being developed by the Commerce Department, “which is signaling it will grant exclusions only sparingly and based on national-security concerns,” according to the Wall Street Journal.

A detailed plan for industry groups seeking exclusions is expected in the coming days. “U.S. importers would likely have to pay tariffs on metals imported this month after the barriers are implemented, even if they are applying for an eventual exclusion, according to people familiar with the discussions,” the Journal added. Companies that want to apply for exclusions from the tariffs will face a 90-day application process, and if granted that exclusion it is unclear if they will be subsequently reimbursed.

Meanwhile, U.S. Trade Representative Robert Lighthizer has been negotiating country exemptions with foreign governments. Some reports suggest Lighthizer will propose voluntary export restraints in lieu of the blanket tariffs to allied countries or a tariff-rate quota equivalent to the quantity of steel or aluminum exported to the United States last year.

In the past 10 days, Lighthizer has met with EU Trade Commission Cecilia Malmström, Japanese Minister of Economy Hiroshige Seko, and UK International Trade Secretary Liam Fox. Malmström later said there was “no immediate clarity on the exact U.S. procedure for exemption, so discussions will continue next week.” Seko stated: “I firmly and clearly expressed my view that this is regrettable. I explained that this could have a bad effect on the entire multilateral trading system.”

Korea-U.S. Free Trade Agreement Marks 6th Anniversary

The Korea-U.S. Free Trade Agreement (KORUS) celebrated the sixth anniversary of its entry-into-force on March 15 even as Korea’s Trade Minister Kim Hyun Chong met with U.S. Trade Representative Robert Lighthizer in Washington to continue the discussions on amending and modifying KORUS.

The U.S. Chamber and its U.S.-Korea Business Council have long maintained the view that KORUS has delivered on its goal of spurring trade, economic growth, and job creation for both economies. As the Chamber noted in a blog post marking the anniversary:

“Not everything with regard to KORUS is perfect. There are important areas where Korea has not met its commitments, and the U.S. Chamber is a leading voice urging both governments to resolve them. But these shortcomings should not overshadow the fact that in six years KORUS is actually advancing many of the administration’s highest priorities and delivering wins for U.S. workers and the economy…

“[Of note,] KORUS is driving growth in U.S. exports of goods ranging from agriculture to autos to information technology and just about everything in between. U.S. aerospace exports to Korea have doubled to $8 billion, and beef exports doubled to more than $1 billion. U.S. services exports have increased nearly 25%, reaching $21 billion. All told, U.S. exports of both goods and services hit record levels in 2017, with its total growing by $8.5 billion – or 13.39% – to surpass the $70 billion mark for the first time ever.”

Business Groups Call for Passage of Miscellaneous Tariff Bill

The U.S. Chamber of Commerce joined the National Association of Manufacturers and more than 200 other associations and businesses to send a letter to both chambers of Congress urging that the Miscellaneous Tariff Bill of 2018 (MTB) be included in the upcoming omnibus spending package. The letter states:

“Our organizations commend the House of Representatives for its approval of the Miscellaneous Tariff Bill Act of 2018 on January 16 by a unanimous vote of 402-to-0. Manufacturers and other businesses across the country, however, have been paying nearly $1 million per day in tariffs since the beginning of 2018 on products not made or available in the United States, because the full Congress has not yet approved the legislation.”

In January, the Chamber sent a letter to the House of Representatives strongly supporting the passage of MTB to “preserve American jobs and improve the competitiveness of U.S. manufacturers.”

Deputy USTRs, Chief Agricultural Negotiator Sworn In

On March 13, U.S. Trade Representative Robert Lighthizer swore in two new deputies and a Chief Agricultural Negotiator. Dennis Shea was sworn in as Deputy United States Trade Representative and Chief of Mission, Geneva, to represent the U.S. as Ambassador to the World Trade Organization. Previously, Shea was a member of the U.S.-China Economic and Security Review commission. C.J. Mahoney was sworn in as Deputy United States Trade Representative for Investment, Services, Labor, Environment, Africa, China and the Western Hemisphere. Mahoney was a partner at Williams & Connolly LLP before joining USTR.

Lighthizer also swore in Gregg Doud as Chief Agricultural Negotiator, with the rank of Ambassador. Previously, Doud was president of the Commodity Markets Council and a Senior Professional Staffer of the Senate Agriculture Committee.

Chamber Hosts Ireland’s Varadkar

On March 14, the Chamber’s European Affairs program hosted Irish Taoiseach (Prime Minister) Leo Varadkar to discuss the deep economic partnership between the United States and Ireland, the consequences of Brexit, and Ireland’s changing role in the European Union. The Taoiseach spoke of his appreciation for the strong two-way trade and investment relationship and the role of U.S. businesses in modernizing the Irish economy and increasing Irish productivity. He stressed that our common language and business culture will ensure Ireland’s continued role as a key U.S. commercial partner and bridge between the U.S. and the rest of Europe after the UK has left the EU.