Panelists Say Section 301 Tariffs Unlikely to Change Much; GSP, MTB Could Renew This Year
Although President Joe Biden criticized the Trump administration tariffs on Chinese imports during his campaign, and although his treasury secretary repeatedly said they contribute to inflation and some of them are harmful, trade lobbyists for UPS and the U.S. Chamber of Commerce said the tariffs are largely here to stay.
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Catherine Mellor, vice president of international trade at UPS, said during an Oct. 19 webinar that manufacturing unions have come to see the Chinese tariffs as protecting their workers' jobs. "That has created a complication of rolling them back," she said.
Mellor noted that UPS is the largest employer of Teamsters, and that its drivers are paid handsomely. "These are not the jobs they’re talking about when they’re talking about worker-centric trade," she said. "They’re talking about manufacturing jobs."
Isabelle Icso, director of international policy at the Chamber of Commerce, agreed. "Politically, it’s important to Biden that he not look weak on China. Any lifting or modifications on tariffs will have to be done in an artful … way." She predicted that after the review is done, the administration could raise tariffs past 25% on some products that are seen as strategic, and lower some on others, but whatever changes are possible would be "quite surgical."
She said the Chamber will continue to push for tariff relief, whether through an exclusion process or this kind of policy, or both.
She said Democrats are split on whether an exclusion process is necessary or whether all the tariffs should stay, and the Republicans also have a hawkish wing and a more-sympathetic-to-importers wing.
She said she'll be waiting to see if a change in control in the House of Representatives changes the political dynamic.
The moderator asked Isco about Sen. Rob Portman's comments that he's interested in a lame duck trade "grand bargain" (see 2210180006), and she said she thought it was quite possible that an end-of-the-year bill could reauthorize the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill.
"I think the chances [that] other items get tacked on is less likely," she said, because of some of the demands on the table and the thorny politics around them. She said she thinks it's more likely GSP and MTB will be renewed "early next year."
"We at the Chamber have been pushing hard for GSP and MTB reauthorization as soon as possible," she added.
The panelists, who were speaking at a webinar hosted by Women in International Trade's New England Chapter, also talked about the Indo-Pacific Economic Framework, which is not expected to lower tariffs, but could improve trade facilitation.
Icso said the Chamber's leadership believes the U.S. rejoining the Trans-Pacific Partnership would be best, "but we obviously recognize the sort of political realities about this." The Chamber is eager to see the digital trade pillar in the IPEF come to fruition, as well as trade facilitation, energy, technology and government procurement planks. "Re-engaging in the region is so important no matter what shape it takes," she said.
U.S. Trade Representative Katherine Tai has argued that IPEF is about market access, even though it is not designed to lower tariffs, because of its emphasis on good regulatory practices. Many of the barriers U.S. agricultural exports face are around biotechnology approvals or what U.S. producers see as overly strict sanitary and phytosanitary rules.
"I think pressure is really building in Washington to get more offensive, and really open more markets for U.S. goods," Isco said, and politicians will want to see if Tai is right, and that IPEF's changes to SPS rules result in higher levels of ag exports to participating countries.
But Icso said it's possible the administration will re-animate paused trade talks for traditional trade agreements. "I think a House flip could certainly increase this pressure," she said. "I’d expect to see more engagement with the U.K., Kenya, and even Taiwan."
In response to a question from International Trade Today, Icso said the Chamber hasn't gotten a lot of details about the progress in the first year of talks between the EU and the USTR to find agreement on trade in steel that preferences steel made with less carbon intensity and protects their domestic steel makers from uneconomic overcapacity.
"We’re certainly interested in seeing how this agreement takes shape," Icso said. But she said when she looked at the readouts about the most recent meeting between the EU's top trade negotiator and Tai, she sensed a difference of opinion about how far along the two sides are.
She said the EU described the idea as "still very much a work in progress," and the USTR statement said the two sides agreed to pick up the pace of negotiations. In a press conference before their meeting, both said they are conscious of the self-imposed deadline of one year from now (see 2210130068).