Trade Cases

Tariff Relief in an Economic Crisis?

Written by Sandy Williams


A battle is brewing among legislators, manufacturers and steel producers regarding whether tariff measures should be suspended on imports under Section 301 and Section 232 during the coronavirus crisis.

Republican members of the Senate Finance Committee urged President Trump to ease tariff restrictions during the pandemic. In a letter on March 25, the committee exhorted Trump to “provide tariff relief on health and safety products and pause Buy American requirements for medical goods and equipment to avoid paralyzing an utterly critical supply chain.”

Additionally, the committee suggested it would be wise to provide a temporary deferral of duty collection for businesses as a “commonsense way to improve the liquidity of our businesses during this time of disruption.”

“The USTR should expand and extend relief through the exclusion process for Section 301 tariffs, including automatically extending any current exemptions for another year,” wrote the Senators. “We need to ensure that all industries whose circumstances have changed because of the outbreak can seek exclusions. This means Americans can apply for exclusions, even if they were denied previously, or had not sought an exclusion before.”

Finally, the committee suggested “suspending implementation of any measures, pending or new, that would create uncertainty or undue difficulty for American workers, families, farmers, ranchers and businesses, and asking our global trading partners to do the same. To that end, we urge you to consider a total moratorium on new tariffs or tariff increases for the time being.”

The Coalition of American Metal Manufacturers and Users concurred with a scaling back of tariffs during the crisis. “The Coalition of American Metal Manufacturers and Users (CAMMU) strongly urges the Trump administration to immediately terminate the Section 232 steel and aluminum tariffs to help U.S. manufacturers during this time of unprecedented crisis caused by the COVID-19 pandemic. If immediate termination is not possible, CAMMU urges at least a 90-day pause on tariff collections as small and medium manufacturers struggle with cash flows. Quick and decisive action to mitigate the ongoing economic damage to manufacturers is urgently needed right now.”

A group of 24 retailers and shippers sent a letter to Larry Kudlow, Director of the National Economic Council, earlier this month requesting the “immediately elimination of tariffs imposed under Section 301 of the Trade Act of 1974 and retroactive refund of duties imposed on U.S. imports of consumer and commercial products from China.”

“We can think of no other policy tool at the administration’s disposal that would have such a fast and beneficial impact as the immediate and retroactive removal of these tariffs,” said the group. “Such a move would instantly put billions of dollars back into the U.S. economy.”

The Americans for Free Trade also implored the president to suspend Section 301 and Section 232 tariffs, which it called “taxes that Americans pay.” The group, representing sectors across the U.S. including small and family-owned businesses, urged the president to “provide tariff relief as one of the measures to help those hurting financially from the economic effects resulting from the current public health crisis.”

Opposition

Five steel industry groups, the American Iron and Steel Institute (AISI), Steel Manufacturers Association (SMA), Specialty Steel Industry of North America (SSINA), The Committee on Pipe and Tube Imports (CPTI) and American Institute of Steel Construction (AISC), took the opposite stance, urging the administration not to weaken import tariffs during the COVID-19 crisis.

Responding to reports that U.S. Customs and Border Protection may ease the time period for paying estimated duties, taxes and other fees while the pandemic is underway, the group urged the CPB to “not allow this crisis to encourage bad actors from taking advantage of an at-risk system during this crisis period.”

“Any efforts to delay or reduce the collection of duties on unfairly-traded steel imports or imports that threaten to impair U.S. national and economic security will ultimately hurt U.S. workers and businesses during this unprecedented moment,“ wrote the group in a letter to acting CBP Commissioner Mark Morgan.

The Alliance for American Manufacturing expressed its support for resisting calls to defer duty payments on imports from China. AAM President Scott Paul said in a letter to CBP:

“The practical effect of broad CBP-issued extensions would be to undermine the effect of tariffs. We recognize that the coronavirus health crisis is resulting in significant economic disruption and Congress is taking aggressive steps to protect vulnerable populations and unemployed workers. However, we strongly urge you to resist against implementing policies that undermine the Section 232 and Section 301 actions, as well as potentially impacting existing antidumping and countervailing duty orders.”

Continued Paul, “This couldn’t occur at a worse time for American manufacturing and its workers who are struggling to survive in this sharp economic downturn. Allowing imports to come in without the present payment of duties gives them a price advantage. Ninety days may very well signal the demise of a company struggling to compete, even if those tariffs are paid at a later date. It’s equivalent to a government sanctioned fire sale for imports to undermine American producers and their workers.”

Administration Response: “No”

President Trump says there is “no reason” to change tariff policy during the coronavirus impact.  During a press conference, the president suggested that countries paying the tariffs are behind the push for tariff relief and proceeded to cast suspicion on groups advocating for such measures.

“Who heads that group? Those countries do, probably,” Trump responded, referring to Americans for Free Trade. “China pays us billions and billions of dollars in tariffs and there’s no reason to do that.”

Trump said he “can’t imagine Americans asking for that, but it could be that China will ask for a suspension or something. We’ll see what happens.” White House officials have confirmed that tariff relief is “off the table.”

On Wednesday, The Wall Street Journal reported that, despite contrary information from the White House, CBP has sent notices stating some delays in tariff payments will be approved.

“Due to the severity of Novel Coronavirus Disease (COVID-19), U.S. Customs and Border Protection (CBP) will approve on a case-by-case basis additional days for payment of estimated duties, taxes and fees due to this emergency,” said the notices mailed to businesses. 

A group of Democratic Senators led by Sen. Diane Feinstein have called for a 90-day moratorium on paying tariffs.

 

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