After 47,000 stores in the U.S. closed in a week, Flexport says that so many companies can't take shipments arriving at East Coast ports that those ports are now shopping for more warehouse space. Because importing companies' warehouses are either full or closed, they tell the ports they'll pay demurrage charges for the goods to stay there. “The ports are actually worried now they won’t have enough space,” said Chandrakant Kanoria, Flexport's head of network operations, during a webinar March 31. He said Savannah is hoping to almost double its warehouse space, and the New York and New Jersey terminals are talking with warehouse providers to try to make room, as well. There are problems in the warehouse logistics ecosystem, as well, because Amazon warehouses stopped accepting any goods other than essentials.
Although the trade ministers of the G-20 agreed that nationalist approaches to medical supplies should be temporary, U.S. Trade Representative Robert Lighthizer told other countries' trade ministers that things will need to be different after the crisis passes, as well. “Unfortunately, like others, we are learning in this crisis that over-dependence on other countries as a source of cheap medical products and supplies has created a strategic vulnerability to our economy. For the United States, we are encouraging diversification of supply chains and seeking to promote more manufacturing at home,” he said March 30.
Nineteen of the 28 senators on the Finance Committee -- including Chairman Chuck Grassley, R-Iowa, and top Democrat Ron Wyden of Oregon -- told U.S. Trade Representative Robert Lighthizer that having the U.S.-Mexico-Canada Agreement start on June 1 is too soon.
Compliance is still a necessity even as the way business is conducted changes radically, Venable lawyers told those tuning in for a webinar March 30. Venable partner Lindsay Meyer said that if importers are going to be paying more to get goods that are in short supply, she wanted to remind them that “under the customs regulations, any agreement to change a price for an imported good must happen prior to export.” She said those changes are best reflected in writing, whether in the contract or in an email.
A recent report from the Congressional Research Service noted that even as some countries place export restrictions on supplies needed to fight the COVID-19 pandemic, the president could remove tariffs on medical supplies under Section 318 of the Tariff Act of 1930. The CRS noted the legality of this section has never been tested, but given that so far, federal courts have upheld the constitutionality of Section 232, it could be that the president could have such broad power to remove tariffs, as well.
Exports to the European Union rose by 5.9% in 2019, the U.S. Chamber of Commerce said in its annual report on the business ties between Western Europe and the U.S. Exports to Belgium, Spain, Austria, Bulgaria and Denmark were all up by double digits, with the most growth in Austria, where exports were 60% above 2018 levels. However, the growth was about half the pace of 2018, when exports to the EU grew by 11%.
Canadian and Mexican politicians are sending different messages to their countries' journalists about how quickly the uniform regulations can be completed for the new NAFTA, now known as the U.S.-Mexico-Canada Agreement. A Canadian politician and a labor leader told a Canadian newspaper that a June 1 date of entry into force is unlikely, given how much remains to be done to be ready, and especially with the disruption caused by the coronavirus COVID-19 pandemic.
Trade restrictions created as result of the coronavirus COVID-19 crisis will change trade years from now and may lead to fewer international shipments in the medical arena, panelists said on a webinar March 26 hosted by the Washington International Trade Association.
The Senate Finance Committee chairman, joined by 11 other Senate Republicans, is asking President Donald Trump to consider a total moratorium on new or raised tariffs, as well as examining how tariffs and import and export restrictions specific to medical supplies can be tackled. They praised the Office of the U.S. Trade Representative for excluding some medical supplies from Section 301 tariffs since the novel coronavirus COVID-19 pandemic spread to the U.S., but said a wider review should be done to make sure none remain. And they encouraged him to coordinate with other countries that have imposed export restrictions in response to COVID-19, so that there aren't cost increases and “critical supply shortages.”
While they are pleased that the Office of the U.S. Trade Representative is seeking information about how Section 301 tariffs are hindering the fight against the spread of COVID-19, three pro-trade Democrats told USTR Robert Lighthizer that “this move alone is not enough to stop the harm that is being done to our health care system and economy. We request that you temporarily suspend tariffs or at least greatly expedite and simplify the tariff exclusion process during this difficult time. Immediate tariff relief will have numerous positive effects, including reducing disruptions to existing supply chains and easing the economic burden on our companies and their workers.”