Leibowitz on Trade: Tariff Update

1. Steel and Aluminum Product Exclusions—The Commerce Department announced a new “232 Exclusion Portal” in a notice it published on June 10. The new portal replaces the “regulations.gov” portal dating from March 2018. The new portal must be used for exclusion requests filed as of June 13, 2019. Any exclusion requests submitted under regulations.gov will continue under that portal. Conforming changes to the regulations dealing with product exclusions under the steel and aluminum tariffs were published in the June 10 notice. Public comment will be accepted until Aug. 9. There were no substantive changes in the rules announced on June 10, but the Department will deal with comments in a “future rulemaking.”
2. Additional Solar Panel Exclusions Approved—USTR announced that three categories of solar products would be excluded from the Safeguard tariff measures on solar panels and cells, for entries on or after June 13, 2019. No additional requests for exclusion from these tariffs will be considered, according to the notice, which was published on Thursday.
3. China Tariffs—A week-long hearing starts tomorrow in Washington to receive public testimony on the proposed “List Four” tariffs on Chinese imports not currently affected. There were so many requests to testify that the hearing was extended to seven days (June 17-21 and June 24-25). No less than 320 witnesses, assembled in 54 panels over the seven days, will testify. In advance of the hearing, more than 1,600 comments were filed. In one letter, 600 companies and trade associations urged the president not to impose the new 25 percent tariffs on $300 billion of Chinese imports. While most comments opposed the tariffs, there was some support for them in the comments. Many companies said that loss of sourcing from China would paralyze their U.S. operations. China has become a nearly indispensable source for many products, and lining up alternative sources is a time-consuming and expensive process for many.
4. India Imposes Retaliatory Tariffs on U.S. Exports—After waiting for several months, India has announced that it will impose retaliatory tariffs on U.S. exports, primarily agricultural products. India had withheld these tariffs while bilateral talks took place with the United States. Earlier this month, the U.S. announced the “graduation” of India from the Generalized System of Preferences, which permitted duty-free imports of some Indian products. With the end of the GSP preference, and the absence of progress on steel and aluminum tariffs, it was time, India announced, to take action.

As I have noted previously, the Trump administration appears wedded to tariffs, and not only as leverage. The administration also claims that imposing tariffs boosts the U.S. economy. Many businesses disagree and have urged the president to refrain from new tariffs. They urge negotiations with China instead. The hearing this week and next on List Four will set the stage for important decisions for the U.S. economy, manufacturing and retailing.

As for the new steel and aluminum exclusions portal, Commerce promises that the new portal “should make significant improvements to the efficiency of the 232 exclusions process.” Let’s hope so. The old system had its problems.

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