Former Trade Staffers Say More Tariffs Likely in Lame Duck, GSP Renewal in Question

There are still three pending Section 232 investigations, and the one on downstream electrical steel products is already at the White House, so you shouldn't be surprised if the Trump administration hikes tariffs on more products on the way out the door, according to Halie Craig, the former trade staffer for Sen. Pat Toomey, R-Pa. Craig, who was speaking on behalf of the R Street Institute, a pro-market think tank, also said she wonders if there will be more action against China, since the country is not on track to meet its phase one purchase targets.

In Congress's lame duck session, a Generalized System of Preferences benefits program renewal is on the docket, and, Craig said, “I think you could see a legislative push for GSP in a funding bill.” But Nasim Fussell, who served as the Senate Finance Committee chief international trade counsel until a few months ago, is more pessimistic. Both women were speaking on the future of trade policy during a Cato Institute webinar on Nov. 12. “To my knowledge there has not been the engaged conversations between the Hill and the administration in order to accomplish something of that magnitude,” Fussell said, referring to GSP renewal. She said it's not been clear to her that the Trump administration wants to renew GSP, since it is not a reciprocal program.

Once the Biden administration takes office in 2021, Rock Creek Global Advisors Managing Director Michael Smart said, the strongest signal the new president could send about working with allies on trade would be to lift the Section 232 tariffs on steel and aluminum for those countries. But, the former Democratic Senate Finance Committee trade counsel said, those tariffs are supported by some steel companies, unions and members of Congress. So perhaps Biden would offer generous tariff rate quotas to allies instead.

Another place to take a more collaborative approach would be at the World Trade Organization, where the U.S. has brought the appellate body to an end and blocked consensus on a director-general pick. Smart said he expects the candidate that the U.S. is blocking to go through in February, and he said he expects the new leadership at the Office of the U.S. Trade Representative to “relatively quickly come to an agreement that allows the dispute settlement mechanism to function.” Craig agreed, saying that she thinks Biden will take “a more conciliatory approach” on both WTO issues. Fussell said that while the current USTR would be “perfectly content” to return to non-binding dispute settlement, she said “I don't know [if] that view is widely shared in Congress.” But, she said, how collaborative the U.S. is in Geneva will depend on who is chosen as USTR.

Moderator Simon Lester, associate director of trade policy studies at Cato, asked the panelists if they think Biden will use trade policy to act on climate, either with a carbon border tax or in pushing for a WTO agreement to drop tariffs on environmental goods, such as solar panels.

“I think this is actually in the strike zone of what a Biden administration is interested in negotiating,” Smart said of the environmental goods negotiation.

Fussell said she thinks negotiating to lower tariffs on those goods “is absolutely the way to go.” She said that if there's a Republican majority in the Senate, “it is going to be tough to make very sweeping changes on climate.” But, she added, there's recognition even among many conservatives that climate mitigation is the way the world is headed. She said that the U.S. and the European Union are going to need to find some common ground on how to price carbon and how to deal with imports as part of that regime, “even though it's going to be hard.”

Lester also asked about the trade negotiations with the United Kingdom, and how likely a completed free trade agreement would be to get through Congress. Smart said that if the UK can figure out how to maintain a frictionless border in Ireland, and give U.S. agricultural interests most of what they want, “then an agreement could be possible,” and he said Congress could renew fast track only for that deal.