Section 232 Tariffs

Sen. Chuck Grassley, R-Iowa, the new Senate Finance Committee chairman, said that while there's room for Democrats to get some of their priorities in the new NAFTA, he thinks President Donald Trump should play hardball if Democrats insist on reopening negotiations. "I want to sit down and talk to those Democrats and see what they have in mind, because surely they can't have in mind renegotiating. But there's things we can do, like side letters on what our feeling is about it," he said. "If they're reaching the point where you gotta go back to the negotiating table, I would encourage the president to pull out of NAFTA, and hope that they're smart enough not to let that happen."

Continued economic "prosperity" is no "foregone conclusion” amid the broadly held concern about the impact to the U.S. economy of the Section 301 tariffs on Chinese imports, Section 232 tariffs on steel and aluminum imports, and “corresponding retaliation against U.S. exports, said Americans for Free Trade in a Jan. 9 “welcome” letter to newly elected and returning members of Congress. “We agree that China must be held to account for its violations of our trade laws and the international trade obligations all nations share,” said the coalition, whose 150 members include multiple associations of customs brokers. “Imposition of a tariff of up to 25 percent on $250 billion worth of China products -- and the threat to impose a similar duty on $267 billion more of such products -- will not remedy the situation. We continue to see stories on a daily basis about companies, both large and small, who are being harmed by these tariffs.” The coalition urges Congress to “exercise its oversight role on trade policy matters to prevent further harm to U.S. workers, consumers, and families that will result from both the existing and proposed tariffs,” it said.

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The incoming Senate Finance Committee chairman suggested during a speech that the committee could rein in Trump's use of Section 232 tariffs. Sen. Chuck Grassley, R-Iowa, said he doesn't mind being creative in negotiations, but he will be reviewing the president's use of those tariffs. "I strongly disagree with the notion that imports of steel and aluminum, automobiles, and auto parts somehow could pose a national security threat," Grassley said, according to his prepared remarks. "Senator Portman and others have already introduced legislation to narrow the scope of how an administration can use the power that Congress authorized in 1962 under the influence of the Cold War (see 1808010048). "I believe that these efforts serve as a prudent starting point for the discussion we need to have on Section 232 authority in the next Congress."

The Government Accountability Office has agreed to look into the Commerce Department's steel and aluminum tariff exclusion process, though it cannot begin the study for about three months. Sen. Pat Toomey, R-Pa., one of the requesters, announced the GAO decision on Dec. 19. "I hope GAO's review produces recommendations for fixing this flawed process so more Americans are spared from these onerous taxes," Toomey said in a press release. The GAO said in its letter to Toomey that "staff with the required skills will be available to initiate an engagement in about three months." Sen. Tom Carper, D-Del., who joined with Toomey and Sen. Doug Jones, D-Ala., in requesting an investigation said that "as of this fall, the Department of Commerce had received nearly 50,000 exclusion petitions from American manufacturers seeking relief from these misguided tariffs." Carper said the "Commerce Department has not only created a broken and convoluted exclusion process, but the agency has only managed to issue decisions in a third of these 50,000 pending cases."

The World Trade Organization agreed to form a panel on whether Russian retaliation for U.S. steel and aluminum tariffs is illegal, at the Dec. 18 meeting of the Dispute Settlement Body. A Russian official said its delegation was bewildered to hear the U.S. say that Russia is undermining WTO rules "when it is the U.S. arbitrarily imposing additional duties on steel and aluminium and using them as a squeezer in order to allow the US, with different degrees of success, to get trade concessions from certain members," a summary of the meeting said. According to a Geneva trade official, there now have been five panels formed on retaliatory tariffs responding to the Section 232 tariffs. At the same meeting, the U.S. blocked a first request by China to form a panel to judge whether U.S. tariffs on Chinese goods under Section 301 are legal. Its delegation said that the two parties are in negotiations, and that's the right place to settle the conflict, not the WTO. The panel will automatically be authorized at next month's Dispute Settlement Body meeting. China said U.S. tariffs are damaging the global economy and damaging global industrial supply chains.

A half-dozen members of the House Ways and Means Committee -- including the outgoing Trade Subcommittee chairman -- sent a letter to U.S. Trade Representative Robert Lighthizer saying the steel and aluminum tariffs on Mexico and Canada need to go. Five Republicans, led by Rep. Jackie Walorski of Indiana, signed the letter, as did Rep. Ron Kind, D-Wis. Kind, whose dairy farming constituents are among those hurt by Mexican retaliation for the tariffs, is interested in leading the Trade Subcommittee next year. They wrote that "we urge you to put the highest priority on lifting the steel and aluminum tariffs and retaliation entirely as soon as possible, and certainly before congressional consideration." The USTR has said he is working on finding a solution to the tariffs on Mexico and Canada, but has not offered a timeline for when agreement might be reached. Only Australia has been given an exemption without a quota so far.

Ten percent tariffs on imported aluminum has driven about 1,000 new jobs, and has not cost jobs among aluminum consumers, according to an Economic Policy Institute report released Dec. 11. One of the aluminum companies that sought Section 232 protection, Century Aluminum, funded the report, and participated in its rollout, through the American Primary Aluminum Association trade group. The report also noted that 22 projects, some expansions, some new, have been announced in rolled and extruded aluminum facilities. These facilities are downstream aluminum, and are not protected by Section 232, though some are protected by antidumping duties. These projects are expected employ more than 2,000 workers when they are open.

The two excluded sectors from planned Europe trade talks -- agriculture and autos -- both want to be included, according to comments filed with the Office of the U.S. Trade Representative ahead of the Dec. 14 public hearing on negotiation priorities. More than 150 organizations and individuals shared their views in the USTR docket ahead of the Dec. 10 deadline for comments.

The U.S. Chamber of Commerce will support the new NAFTA, and will lobby for its passage, the group announced Dec. 10. CEO Thomas J. Donohue wrote that the group will be working to resolve a handful of outstanding issues, but only specifically mentioned the Section 232 tariffs on Mexican and Canadian steel and aluminum. He spent far more time scolding President Donald Trump for his intention to terminate NAFTA "in order to present the incoming Congress with a choice between the new agreement and no agreement. We disagree with this strategy." Donohue wrote, "Issuing this threat against a co-equal branch of government is neither necessary nor productive and could actually cost votes." A prominent free-trade Democrat in the House of Representatives made the same point on Dec. 10 (see 1812100024).