Panelists at the annual Washington International Trade Association think there will be a U.S. deal with China that will avoid more tariff hikes, but they disagree on when and what it will mean for the relationship going forward. David Dollar, an expert on U.S.-China economic relations at the Brookings Institution, said that "realistically China is not going to change its system overnight." He scoffed at a deal that includes purchases of U.S. commodities in an effort to shrink the trade deficit. "I see that mostly as a shell game and mostly PR."
Mara Lee
Mara Lee, Senior Editor, is a reporter for International Trade Today and its sister publications Export Compliance Daily and Trade Law Daily. She joined the Warren Communications News staff in early 2018, after covering health policy, Midwestern Congressional delegations, and the Connecticut economy, insurance and manufacturing sectors for the Hartford Courant, the nation’s oldest continuously published newspaper (established 1674). Before arriving in Washington D.C. to cover Congress in 2005, she worked in Ohio, where she witnessed fervent presidential campaigning every four years.
Dispute panels are forming at the World Trade Organization on the Section 301 tariffs the U.S. levied on China and on the retaliatory tariffs Turkey levied on the U.S. in response to U.S. tariffs on Turkish steel and aluminum. China said the tariffs, on about $250 billion worth of its exports, are damaging China's economic interests and the rules-based trading system. The panel on Turkish retaliation is the sixth panel formed on retaliation for the metals tariffs, which are applied around the world.
The Congressional Budget Office says that the fact that the administration imposed additional tariffs on 12 percent of all imports will reduce GDP -- after adjusting for inflation -- by about 0.1 percent each year through 2029, assuming all the tariffs stay on. The projection also assumes that the 10 percent tariffs on about $200 billion in Chinese imports do not rise to 25 percent. "Tariffs reduce domestic GDP mostly by raising the prices paid by U.S. consumers and businesses, which reduces the purchasing power of domestic consumers and increases the cost of business investment," the CBO wrote in a report released Jan. 28. They said reduced exports, due to retaliatory tariffs, also contribute to the economic drag, though both are partly offset by increases in domestic production.
Sen. Ron Johnson, R-Wis., and a half-dozen Republican colleagues told President Donald Trump that the decline in the stock market since October is due partly to higher tariffs, and they used his own words against him to argue that steel and aluminum tariffs should be lifted on Canada and Mexico. Their letter, sent Jan. 28, starts by quoting a Trump tweet from March 2018 that said steel and aluminum tariffs in North America "will only come off if a new & fair NAFTA agreement is signed." They noted that he signed the new NAFTA at the end of November, but that the tariffs haven't been lifted.
Trade ministers from 49 countries and the European Union said they will start World Trade Organization negotiations on electronic commerce, and U.S. Trade Representative Robert Lighthizer lauded the news on Jan. 25. "The United States is pleased that the initial exploratory work on digital trade issues at the WTO in 2018 was productive. The digital economy is a powerful force for global economic growth. The United States is committed to seeking a high-standard agreement that creates strong, market-based rules in this area and reduces the barriers around the world that threaten to undermine the growth of the digital economy, including restrictions on cross-border data flows and data localization requirements," he said.
A House bill that would limit the ability of the president to unilaterally raise tariffs or block imports without congressional approval was reintroduced by Rep. Warren Davidson, R-Ohio, and 10 co-sponsors, including prominent members of the Freedom Caucus. Davidson calls the bill the Global Trade Accountability Act, and he first introduced it in March 2018. Its likelihood of becoming law is slim, because Senate Majority Leader Mitch McConnell, R-Ky., has repeatedly said he will not bring forward bills he expects the president would veto.
President Donald Trump said Jan. 25 that he and Congress have reached a deal to end the partial federal government shutdown and reopen the government for three weeks. He promised to sign a bill temporarily funding the parts of the government that have not been funded this fiscal year. The bill would take funding through Feb. 15.
Leaders of auto, aluminum and farm interest groups are all pushing for the Section 232 steel and aluminum tariffs to be lifted on Canada and Mexico, as the administration said would happen once NAFTA was renegotiated. But none of the groups will make their support for the U.S.-Mexico-Canada Agreement contingent on the tariffs being lifted.
House Ways and Means Chairman Rep. Richard Neal, D-Mass., told Worcester, Massachusetts, journalists, that there once were more union manufacturing jobs in Worcester, that provided stability and a good standard of living. Now, the rapid advancement of technology and globalization are challenges, he said. But, he added, "I don't think you can tell the young people here in the city of Worcester ... that globalization is going to retreat. So I think protectionism in terms of trade is a mistake, and I think the idea we can't compete in the international trade arena is a mistake."
It remains unclear whether House Speaker Nancy Pelosi will take up the successor agreement to NAFTA in 2019, and whether the president might try to force her hand by submitting a withdrawal notice, according to a Mayer Brown partner who served as chief of staff at the Office of the U.S. Trade Representative before joining the firm. "We're intentionally leaving it with a lack of clarity," Tim Keeler said, "Because that is frankly what the situation is in Washington right now."