The United States boasts one of the largest economies in the world and is the largest importer of goods and services. Trade is critical to American prosperity, and so shifts in trade policy and multilateral trade agreements have a tremendous economic impact both domestically and internationally.

On March 21, Karen Lobdell, Director of Product Management, presented an “Update on Trade & Tariffs,” which covered the latest actions taken by the Trump administration and their impact on commerce at the CPAs in Industry Spring Conference in Milwaukee, Wisconsin. Her overview addresses the Trump trade policy approach, the recent uptick in unilateral and retaliatory tariffs, and the effects of these actions on international, domestic, and electronic trade.

New trade policies and impact

The update covered the Trump administration’s “America First” trade policy that has employed an extensive use of unilateral tariffs, like Section 232, 301, and 201, that have negatively impacted industries that use steel and aluminum. These increased tariffs incited a retaliatory trade war between the U.S., China, and their trading partners for the better part of 2018, continuing into 2019. The introduction of retaliatory tariffs coupled with the Trump administration’s decision to back out of the Trans-Pacific Partnership negotiations and replace NAFTA with the United States-Mexico-Canada Agreement (USMCA) has driven up trade costs for U.S. imports and exports around the world. Additionally, the U.S. is not currently involved in any new free trade agreement negotiations. While there are some plans for talks pending with the European Union and Japan, they are a long way off.

Impacts moving forward

In response to the retaliatory duties, the World Trade Organization (WTO) has seen an uptick of cases under the Dispute Settlement Agreement in addition to exclusion requests by companies seeking a tariff break. With new requests coming in every day, the WTO continues to struggle to catch up with the ever-growing backlog. Automotive, tech and telecommunications, and agricultural industries are predicted to see the most impact.

At the present time, the U.S., Mexico, and Canada must still ratify the USMCA in order for it to take effect. However, the U.S. steel and aluminum tariffs that are still in place for Mexico threaten the country’s ratification progress. With the rest of the world steadily moving away from protectionism with new free trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, the U.S. is, in some ways, getting left behind.

Karen concluded that, moving forward, the only certainty in the trade environment is uncertainty. Contention domestically and globally regarding international trade will likely persist throughout 2019, and proactive planning and monitoring of your ongoing compliance strategy is key to avoiding a negative cost impact. While some progress is possible this year, the trade policy environment is likely to remain challenging for businesses, governments, and global supply chains.

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