Mara Lee

Two Republican senators who are retiring this year believe some of their colleagues will take a stand against the protectionist approach of the Trump administration. "Republicans need to stand up to tariffs," Sen. Jeff Flake, R-Ariz., said during a June 24 interview. "We're in the nascent stages of a full-scale trade war, and the president simply seems to want to escalate." He said until a bill (see 1806220014) that would require a vote on Section 232 tariffs moves, "I think myself and a number of senators, at least a few of us, will say, 'Let's not move any more judges.'"

The one-year clock for product exclusions to the Section 232 tariffs starts the day the decision memo was signed, not the date a request was posted for comment, a Commerce Department spokesperson said June 25. So, for example, a request that was posted for comments on April 20 that the Bureau of Industry and Security approved on June 19 will apply until June 19, 2019. That one year starts on the date the deputy assistant secretary of export administration signed the memo, which was June 19, not on the original date of posting the request and not on the date the decision became public.

Harley-Davidson said retaliatory tariffs against its motorcycles in Europe cannot be passed on to consumers without massively impacting sales, so it will work on increasing capacity at its plants outside the U.S. to serve the European market. Harley-Davidson motorcycles sold into the European Union have faced a 31 percent tariff since June 22; before that, there was a 6 percent tariff. In a regulatory filing June 25, the Milwaukee-based company said it will have to eat between $30 million and $45 million in tariffs for the rest of 2018. It estimated it will take nine to 18 months to complete a ramp-up in capacity in other factories. The company has factories in India and Brazil, and is in the process of opening a factory in Thailand.

Whether the material was imported from South Korea, which is not eligible for exclusions at all; whether the filer was a law firm, an experienced importer, a one-time importer or a manufacturer -- the denial memos all read exactly the same. All of the denials say the application was not complete enough "to verify the product description and/or [Harmonized Tariff Schedule] code," and the requester can apply again without prejudice.

Canada rejected the U.S. request for a dispute panel on the issue of foreign wine sales in British Columbia grocery stores. The rejection came during the World Trade Organization dispute settlement body meeting June 22. The issue is the stores require that imported wine be stocked in a separate building from the main store (see 1701180083). American wines are still sold at liquor stores, which used to be the only place to buy wine in the province. Countries faced with a dispute panel request can only veto its establishment once, so a panel should be formed shortly. The Office of the U.S. Trade Representative asked for comments on the dispute by July 20, at docket number is USTR-2018-0019 on regulations.gov.

The Senate Appropriations Bill for the Department of Homeland Security for fiscal year 2019 would spend $14.26 billion on CBP, almost $239 million more than the current spending. The committee report said that it's sending $49 million for 375 additional CBP officers, "in recognition of wait times at certain ports of entry as well as the volume of illicit drugs passing through POEs." With regard to drugs smuggled through ports of entry, the report says the Senate intends to provide $30 million in support of enforcement at international mail facilities and express consignment carrier locations "by enhancing scientific and laboratory staffing, increasing law enforcement staffing and canines, improving facilities, deploying technology to locate targeted packages, enhancing detection and testing equipment, and improving interoperability with FDA detection equipment." The bill provides $174 million for non-intrusive inspection equipment, of which the $30 million for opioids is a subset.

On the same day that European tariffs went into effect in retaliation for U.S. steel and aluminum tariffs, President Donald Trump tweeted that if the European Union doesn't drop those tariffs and other trade barriers soon, "we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!" The Commerce Department is conducting an investigation into whether auto and auto parts exports are a threat to national security. While speaking to reporters at a convention on June 21, Commerce Secretary Wilbur Ross said the investigation should be complete in late July or in August.

Lobbyists whose sectors could be affected by a renegotiated NAFTA and a political analyst agreed that they don't know where NAFTA talks are going. Some see midterm elections as key to what happens next.

The problem with intellectual property theft is not only not going to be solved by tariff threats, experts said, it's likely to get worse in coming years. "I don't believe a set of punitive tariffs will bring about change in China whatsoever," said Mary Lovely, a China scholar at the Peterson Institute for International Economics. She said the pressures to steal intellectual property to support economic growth will increase, but also cautioned that "there are many ways China acquires technology, some of which don't violate international norms, and some of which do."

Among the companies allowed exclusions to the Section 232 tariffs on steel and aluminum are the Connecticut company that makes Schick razors, which will be allowed to import steel blades from Japan, and U.S. Leakless, an Alabama company that imports Japanese rubber-coated gaskets used in auto transmissions. The Commerce Department accepted 42 steel product exclusion requests from seven companies, it announced on June 20.