Canadian Minister for International Trade Diversification James Carr said Canada is "following with great interest" what the Senate Finance Committee chairman and other Republicans senators are saying about Section 232 tariffs. "We will see how they decide to work that out," he said at the Council of the Americas conference May 7. He said that even though none of the countries got everything they wanted in the new NAFTA, Canada's government wants to see it ratified. "We negotiated for 14 months in good faith, we found alignment with our trading partners, we want to see it ratified. There are irritants, though, and the 232 tariffs on the steel and aluminum -- which we believe to be unwarranted -- are a real problem. It's going to be difficult to ratify the agreement as long as those tariffs are in place." He said Canadians are talking with U.S. counterparts about the tariffs, "and we hope they will be removed."
Section 232 Tariffs
The United States currently maintains a 25% tariff on steel imports and 10% on tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962. In 2018, the Trump administration imposed Section 232 Tariffs on steel and aluminum imports into the United States, citing national security concerns. The U.S. agreed to lift tariffs on Canada and Mexico after the signing of the United States-Mexico-Canada Agreement (USMCA), and reached deals with the European Union, Japan and other countries to replace the tariffs with quotas for steel and aluminum imports into the U.S.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, is now saying it's not his stubbornness on getting Mexican and Canadian retaliatory tariffs lifted that stands in the way of the Senate ratifying the new NAFTA. He said he's looking for "any way of moving ahead," but added, "let’s just assume that Chuck Grassley said that we ought to go ahead, regardless of whether the tariffs come off, it isn't going to happen. ... You're never going to get the 51 votes through the United States Senate" in that scenario, he said.
Calling the Section 232 exclusion process for steel and aluminum products "a master class in government inefficiency," Rep. Jackie Walorski, R-Ind., sent a letter to Commerce Secretary Wilbur Ross pointing out patterns of denials that she suspects mean the Commerce Department puts the burden of proof on requesters, not on the producers who object.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, wrote an opinion piece published in The Wall Street Journal April 28 that reiterated his often-expressed view that without the end of steel and aluminum tariffs on Canada and Mexico, the new NAFTA will not be ratified. He wrote: "If these tariffs aren’t lifted, USMCA is dead. There is no appetite in Congress to debate USMCA with these tariffs in place." Mexico and Canada have placed retaliatory tariffs on U.S. products, including agriculture, and Grassley said the Mexican tariffs on pork have lowered the value of each hog by $12.
Some experts are expecting President Donald Trump to announce a tariff plan in mid-May for autos -- even if he suspends implementation, as he did initially for Europe and NAFTA partners on steel and aluminum. But a new analysis says he has many ways to put off revealing his cards. The Section 232 statute gives the president the option to deliberate for an additional 180 days after the first 90-day deadline -- that would move the decision date to Nov. 14. Peterson Institute for International Economics economist Jeremie Cohen-Setton wrote that there are other options for Trump to keep holding the possibility of tariffs over European negotiators' heads without laying out exactly what would be taxed and at what level. He could ask for a supplemental analysis, or another agency to weigh in, which in past actions delayed a decision by more than a year and a half. He could terminate this investigation, but then quickly restart it. "A Section 232 investigation on oil was, for example, first initiated in 1973, then in 1975, and again resurrected in 1978," Cohen-Setton wrote.
The World Trade Organization formally adopted the Russia-Ukraine panel ruling, the first time the WTO tackled the national security exception from the General Agreement on Tariffs and Trade (see 1904120022). The case has implications for the Section 232 tariffs on steel and aluminum, which have hit U.S. allies as well as strategic competitors. The panel had found that the Russian Federation had met the requirements for invoking the national security clause in restricting transit of goods across its territory to Ukraine, because Russian seizure of Ukrainian territory (Crimea) counts as a time of international emergency.
President Donald Trump threatened, in a tweet April 23, to match European Union tariffs on motorcycles, as he reacted to Harley-Davidson corporate earnings news. He wrote: "Harley Davidson has struggled with Tariffs with the EU, currently paying 31%. They’ve had to move production overseas to try and offset some of that Tariff that they’ve been hit with which will rise to 66% in June of 2021. So unfair to U.S. We will Reciprocate!" As free-trade advocates noted on Twitter, the EU tariff is one of the tariffs that was raised because of the U.S.'s Section 232 tariffs on aluminum and steel.
CBP has assessed about $22.6 billion in duties under the major trade remedies started during the Trump administration as of April 10, a CBP spokeswoman said. That includes $15.3 billion in duties from the Section 301 tariffs on goods from China, she said. The first tranche of Section 301 tariffs took effect on July 6, 2018 (see 1807050033); the second took effect on Aug. 23, 2018 (see 1808070046); and the third, on Sept. 24, 2018 (see 1809240015). CBP also has assessed about $5 billion under the Section 232 tariffs on steel and $1.6 billion under tariffs on aluminum as of Oct. 16, 2018, the spokeswoman said. The Section 201 trade remedies on washing machines and solar cells (see 1801230052), imposed Jan. 23, 2018, account for $725 million in assessed tariffs, she said.
The Office of the U.S. Trade Representative is publishing its latest list of product exclusions from the first tranche of $34 billion in Section 301 tariffs on China. This latest third list of exclusions does not include any full tariff schedule subheadings, instead applying to 21 subsets of tariff numbers in Chapters 84, 85 and 90.
SAN ANTONIO, Texas -- A lawsuit challenging the new CBP drawback regulations that limit drawback on goods subject to excise taxes (see 1812190011) is expected soon, Sandler Travis lawyer Michael Cerny said on a panel at the National Customs Brokers & Forwarders Association of America's annual conference on April 16. CBP is saying "the export of excise-tax-free goods is considered a drawback, therefore you can't get a second drawback of that through substitution," Cerny said. "This is going to be challenged," and he said he expects a lawsuit within "the next few weeks." The excise tax changes became effective on Feb. 19, 2019.