Section 232 Tariffs

A Trump administration official, the former U.S. trade representative during the George W. Bush administration and a prominent trade lawyer discussed the weaknesses of the World Trade Organization -- and globalization more generally -- during a session at the Georgetown Law International Trade Update March 7.

The Commerce Department will launch a Section 232 investigation that could result in tariffs, quotas or other import restrictions on titanium sponge, it said in a March 4 press release. Requested by Titanium Metals Corporation (TIMET) in a petition filed in September 2018, the investigation will examine “whether the quantity or circumstances of titanium sponge imports into the United States threaten to impair the national security,” Commerce said.

The tone of both the U.S. and Indian governments on the termination of India from Generalized System of Preferences benefits leaves the door open for at least partial re-entry, said Dan Anthony, who manages the Coalition for GSP, in a March 5 interview. The letter President Donald Trump sent to Congress said, "I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets." The Indian Ministry of Commerce and Industry said, "India was agreeable to a very meaningful mutually acceptable package ... while keeping remaining issues under discussion in the future." The Commerce Ministry said India wanted to take a "suitable trade margin approach" to medical devices, and that it was open to "the requested simplified dairy certification procedure," to deal with the fact that American cows are fed animal-derived blood meal.

The new NAFTA will reverse outsourcing decisions in the auto industry, the U.S. Trade Representative's annual report on the trade agenda said, and one of the administration's top priorities for 2019 is to get Congress to ratify it. The report, which spends 26 pages on this year's agenda and the rest laying out the status of current free trade agreements, negotiations and enforcement actions during 2018, was released late March 1. Generally, the report defended the administration's actions, arguing they're not protectionist but rather pro-worker, and noting that both imports and exports grew in high single digits during the first 11 months of 2018.

Agriculture Secretary Sonny Perdue told the House Agriculture Committee that a failure to ratify the NAFTA replacement "would be devastating," and he said he hopes all House members understand how damaging that would be to the agricultural economy. Perdue said there's a lot of energy and momentum among the groups lobbying for passage, but acknowledged that "the trickiness of the [Section] 232s" makes it more difficult to get the deal through. Because of the Section 232 tariffs on steel and aluminum, Mexico and Canada are levying tariffs on U.S. pork, cheese and other agricultural products.

U.S. Trade Representative Robert Lighthizer, who is leading the China trade talks, downplayed the possibility that President Donald Trump and Chinese President Xi Jinping will sign a trade agreement a month from now. Lighthizer, who testified before the House Ways and Means Committee Feb. 27, was asked by Chairman Richard Neal, D-Mass., if he sees a package coming in the next few weeks. "I’m not foolish enough to think there’s going to be one negotiation that’s going to change all the practices in China," Lighthizer replied. "At the end of this negotiation, if we’re successful, there'll be a signing." But that's the beginning of a long process to monitor China's compliance with what it promises to do.

Although the main topic of the hearing was China, U.S. Trade Representative Robert Lighthizer told House Ways and Means Committee members repeatedly Feb. 27 that if they don't ratify the U.S.-Mexico-Canada Agreement, there will be no trade agenda for the next several years. "If we don’t pass USMCA, it says we don’t have a consensus," he said. Lighthizer also said: "It’s clearly better than its predecessor, it’s no question. Millions and millions of people are affected [by NAFTA]. You just have to pass it."

Kentucky Gov. Matt Bevin says there shouldn't be steel and aluminum tariffs on Canadian products, but expressed confidence that the Trump administration will make the situation right eventually. Bevin is a Republican who leads a state that is third-highest in auto industry jobs as a proportion of the workforce. "I wish people would just have patience," he said at a Feb. 21 event sponsored by the Canadian American Business Council. He suggested the reason the tariffs are still in place is "there's a limited amount of bandwidth" at the Office of the U.S. Trade Representative, and they have "a limited amount of ability to fight all these fires at once."

Canada's Ambassador to the U.S. David MacNaughton said he thinks U.S. and Canadian negotiators will resolve Section 232 tariffs on steel and aluminum "in a short while," and then reiterated the prediction, saying it will be resolved soon. MacNaughton, who was speaking Feb. 21 at an event sponsored by the Canadian American Business Council, said getting the tariffs lifted "is No. 1, 2 and 3 on my agenda here."

A senator who has not yet signed on to either current Senate bill tackling national security tariffs says he prefers the stronger approach taken by Sen. Pat Toomey, R-Pa. (see 1901310029). Sen. Richard Blumenthal, D-Conn., said in a phone call from Connecticut that he believes that because Toomey's bill requires Congress to act within 60 days to accept or reject new tariffs, it would still allow the tariffs to be used in true national emergencies. Blumenthal said that because the approach taken in the other bill, sponsored by Sen. Rob Portman, R-Ohio, (see 1902060051) -- essentially a disapproval resolution after tariffs are announced, giving Congress power to overrule the president on future Section 232 tariff actions -- it would require veto-proof majorities to change the White House's course. "In this day and age, veto-proof majorities are pretty rare," Blumenthal said.