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. Can you fill us in on developments in the trade arena resulting from recent U.S. trade initiatives?

A. Recent developments on the global trade front have led to growing friction between the U.S. and many of its key trading partners.

 

Section 301 tariffs on China

On July 6, 2018, the 25% additional tariff the United States threatened to impose on a wide range of Chinese imports went into effect. On the same day, China implemented a retaliatory tariff of 25% on a number of U.S. imports. President Trump responded to this action by ordering the U.S. Trade Representative to identify 200 billion dollars of additional Chinese imports for potential counter retaliation as a result of the Chinese action. It seems that the trade war is on.

 

Section 232 action on steel and aluminum

You will recall that on March 11, 2018, the President issued a proclamation imposing a 25% additional tariff on designated steel products and 10% additional tariff on designated aluminum products. Temporary exemptions were provided for certain countries while bilateral negotiations took place. On May 31, 2018, those exemptions expired for the European Union (EU), Canada, and Mexico, and the additional tariffs for steel and aluminum from those countries went into effect. All three have now implemented retaliatory tariffs against the U.S., as has Turkey. Complaints have also been lodged against the U.S. actions at the World Trade Organization (WTO) by several countries, including the EU and Norway.

The EU also recently voted to launch a so-called safeguards investigation to determine if injury is resulting from steel imports flooding into the EU that would have been shipped to the U.S. had the U.S. not imposed the additional tariffs. The investigation is expected to take about nine months. An affirmative ruling could result in additional tariffs and/or quotas on steel products entering the EU. While the investigation is ongoing, international trade rules allow the EU to impose “provisional safeguard” tariffs for up to 200 days, if it concludes that increased imports have caused or may cause serious injury to its steel sector.

 

Section 232 action on automobiles

As reported in an earlier Weise Wednesday, President Trump initiated a new investigation on May 23, 2018, to determine if automobile imports are threatening the national security of the U.S. An affirmative finding could result in additional duties and/or quotas on imported automobiles. A public hearing on this matter will be held on July 19-20. It has been reported that the investigation is moving swiftly and could be completed as early as August of this year.

 

Conclusion

All of these developments have made it extremely challenging to be engaged in global trade today and created a great deal of uncertainty as to what the future holds for global traders. A recent press report even suggests that President Trump is looking at possible draft legislation to circumvent WTO rules and facilitate the imposition of higher tariffs on U.S. imports. Such a move would be quite controversial, however, and would require congressional action. Global traders need to continue to stay actively engaged in monitoring new developments like these and continue to make your views known to government decision makers.