Welcome to Weise Wednesday! Twice a month we will share a brief Q&A with the former U.S. Commissioner of Customs, Mr. George Weise. If you have questions, we encourage you to send them to This email address is being protected from spambots. You need JavaScript enabled to view it..

 

Q. Could you provide an update on the status of major Trump administration trade initiatives that you discussed in recent Weise Wednesdays?

A. These certainly have been very busy times on a range of trade fronts. Today I will provide updates on NAFTA renegotiations, the section 232 steel and aluminum tariffs, and ongoing negotiations between the United States and China to resolve trade disputes in advance of the implementation of section 301 tariffs on designated Chinese goods.

 

NAFTA renegotiation

The trade ministers of the U.S., Canada, and Mexico are meeting this week to resume official negotiations to revise NAFTA. The ministers met informally in Washington, D.C. recently in an effort to resolve the outstanding issues. Although no specifics have been announced on the status of the outstanding issues, Canada’s trade minister commented that the talks resulted in “very solid, very positive, very good progress.” U.S. Trade Representative Lighthizer stated that the hope is to conclude an agreement between the three parties by the end of May. That is an ambitious timetable, and the talks this week should give a better indication as to whether that goal can be reached. 

 

Section 232 steel and aluminum tariffs

You will recall the U.S. recently imposed a 25% additional tariff on designated steel products and a 10% increase in tariffs on designated aluminum products. At the time those tariffs were imposed, a delay in implementation of the tariffs for several countries was granted until May 1 while bilateral discussions with those countries took place. The Trump administration issued proclamations last week clarifying the status of the exempted countries.

As a result of successful bilateral negotiations, it was announced that South Korea would be permanently exempted from the additional steel tariffs but would be subject to the tariffs on aluminum products from May 1 on. Under the bilateral agreement, South Korea agreed to limit its steel exports to the U.S. through a quota and made some additional trade concessions to the U.S.

The steel and aluminum tariff exemptions for Argentina, Australia, and Brazil will be postponed indefinitely as bilateral agreements tentatively reached with each of these countries are finalized. It is expected that such agreements will impose quotas on steel and aluminum exports from those countries to the U.S.

The exemptions for steel and aluminum products from Canada, Mexico, and the European Union (EU) will continue until May 31, 2018, while bilateral discussions with each continue. No tentative agreement has been reached with any of these countries, and all appear to be resisting U.S. insistence on quotas on steel and aluminum exports. The EU has publicly threatened to impose retaliatory tariffs against U.S. exports if a permanent exemption is not granted.

 

Section 301 tariffs on China

On April 3, the Office of U.S. Trade Representative (USTR) published a list of Chinese products that would be subject to an additional 25% tariff as a result of a 301 action brought against China concerning intellectual property issues. USTR has solicited public comments on the proposed list and announced that a public hearing would be held on May 15 to receive public input. Meanwhile, China published its own list of U.S. products that would be subject to retaliatory tariffs if the U.S. goes forward on imposing additional tariffs on Chinese goods. 

The U.S. tariffs will not go into effect until 60 days after the public comment process is complete and the final product list is complete. As expected, the U.S. and China recently launched bilateral talks in an effort to resolve the underlying dispute between the parties. Last week a U.S. delegation of Secretary of Treasury Mnuchin, Secretary of Commerce Ross, and USTR Lighthizer went to China and engaged in two days of serious discussions on a wide range of issues surrounding Chinese trade practices and its trade relationship with the U.S. 

Public comments from the two parties made clear that little progress was made in resolving the underlying issues and that the gap between the two is quite wide. There were no announcements at the conclusion of the talks about next steps in the process. Presumably, talks will continue, and hopefully progress can be made.

 

Conclusion

All of these issues obviously have major potential consequences for the trade community, and it is not clear how the issues will be resolved. It is, therefore, imperative that interested parties stay engaged to make your views known to the government on the potential impact of these issues on your business. Stay tuned for further developments.