Venable: Start Lobbying Now for Exclusions to Coming Tariffs
Venable lawyers said no one knows whether President-elect Donald Trump will hike tariffs on China by 10 percentage points, by 60 percentage points, or bring current tariff levels to 60%. Nor does anyone know if the threat of 25% tariffs on Canadian and Mexican exports will become reality.
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But, Elizabeth Lowe said, while importers are anxious to find out "which countries, what products, at what rate and for how long" tariffs will endure, one thing is clear: "We will see additional tariffs of some form during the second Trump administration."
Lowe and her colleagues were speaking on a Dec. 17 webinar on the future of tariff and trade policy.
Nick Choate, a senior policy adviser at Venable and former Senate staffer now in government relations, said: "Trump has to do something early on trade and tariffs."
He said that members of Congress are also tough on China, but said if Trump's tariff actions on Chinese imports are broad and very high, it could start costing jobs in members' districts. At that point, he said, "these guys start to reconsider."
Still, Choate said neither party will act to constrain Trump's ability to raise tariffs without congressional approval. "The most you're likely to see from Congress is letters of support, letters of opposition," he said. "Congress is going to pretty much let them do what they want."
He said the prevailing attitude on Capitol Hill is that companies have had time to adjust their supply chains since the Section 301 duties began, "and if they’re still reliant on China, maybe that’s their problem."
Still, Choate said, "We would expect a very robust exclusions process." He said that if all the tariffs Trump talked about on the campaign trail or on social media were imposed, and there were no exclusions, it would cost importers $2.5 trillion a year. "Which politically does not seem that likely."
Lowe said it's likely Trump would use the International Emergency Economic Powers Act, or IEEPA, to hike tariffs, because it is quicker than initiating a Section 301 investigation. If that happens, she said, "I'm sure there will be legal challenges to that."
Ashley Craig, chair of Venable's international trade group, said that while a legal challenge is "potentially viable," it would take years to play out, and therefore is of no help with the economic costs in the short term.
Craig said it would be more useful to try to get a dinner with Trump, or, if your firm is not high-profile enough to get on the president-elect's schedule, at least get in front of the transition team to make the argument that your sector should be spared.
"We know President Trump is someone who fancies a sit down," he said.
Lowe agreed that it's not too soon to start lobbying, though she suggested firms contact their members of Congress, "to key up their support in case there are exceptions."
A group of finance professors found that for goods subject to Section 301 tariffs that were not among the strategic products China planned to dominate, importers whose political action committees and top leaders donated more to Republicans than to Democrats were more likely to receive an exclusion (see 2411270051).
Craig asked Choate if he thinks the Miscellaneous Tariff Bill, which "has been stuck for a long time now," is going to come back, because of Trump's pro-tariff beliefs.
Choate responded, "Given where the administration is on trade generally, I can’t imagine that being a priority."
Lowe said Venable is working with several clients to amend existing contracts to spell out how tariff burdens will be shared, and she advised that listeners do the same.
"To the extent that you have the capacity, the resources, the space to store things, folks are stockpiling inventory," she said. She said companies should also look at "shifting out of higher risk countries like China that are undoubtedly going to be subject to tariffs."
Craig said he expects Trump to continue the rulemaking process begun under Biden to restrict de minimis. Because that's more of an issue for consumers than for businesses, he said he will be interested to see if the trade community rallies against the change.
He predicted that Trump's administration will try to increase Uyghur Forced Labor Prevention Act enforcement, though he noted that CBP will be stretched, with mass deportation plans. "Do not forget there are other areas of trade concerns outside of tariff policy," he warned. "For those who have been unfortunately been part of UFLPA holds … brace for impact, that is only going to increase come Jan. 20."