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By Katie Cross, Senior Associate,
Blakey & Agnew
Almost two years ago, in August 2017, President Trump directed the Office of the U.S. Trade Representative (USTR) to investigate whether China's laws, policies, practices, or actions have harmed U.S. intellectual property rights, innovation or technology development. The investigation, which was initiated under section 301 of the Trade Act of 1974 (Section 301), ultimately found that China does impose substantial restrictions on U.S. investments and activities and directs and facilitates investment in and acquisition of U.S. companies to obtain technologies and intellectual property. As one potential way to address these policies, the President directed the USTR to consider implementing tariffs against imports from China.
Since then, three different product lists have been subject to additional tariffs and, in total, the U.S. has imposed additional tariffs on about $250 billion of Chinese goods. In response to these ad valorem duties, China has imposed their own tariffs on around $110 billion of U.S. goods.
Negotiations between the two countries stalled in May 2019, with President Trump saying that China had reneged on certain promises. As a result of the stalled negotiations, USTR requested comments on an additional list of products to be subject to an ad valorem duty of up to 25 percent. This new list totals around $300 billion and covers almost all products imported to the U.S. from China that were not included on a previous list. Among the products are intermodal containers and port cranes. After receiving thousands of comments, USTR and the rest of the Section 301 Committee held seven days of hearings to listen to direct stakeholder input. The American Association of Port Authorities (AAPA) testified to ask that cranes be removed from the proposed list, noting that there are no viable alternative companies in the U.S. that could produce the products and that an additional tariff on them would harm ports. The Institute of International Container Lessors testified that the proposed tariffs on containers would hurt U.S. competitiveness and that, like cranes, there is no viable production option in the U.S.
At the June G20 summit, President Trump and China's President Xi Jinping relaunched talks between the two counties in an effort to stop the imposition of any new tariffs, including the finalization of the proposed $300 billion list.
China is not the only country with which the U.S. is
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negotiating new trade rules. The U.S., Mexico and Canada have been re-negotiating the North American Free Trade Agreement (NAFTA), and in late-2018 leaders from the three countries signed a new deal, titled the U.S.-Mexico-Canada Agreement (USMCA). The deal was then sent to the legislative bodies of the three countries for ratification.
However, steel and aluminum tariffs that the U.S. implemented on multiple countries, including Canada and Mexico, posed a problem for the ultimate agreement. Both Mexico and Canada said the U.S. would need to remove the tariffs before the USMCA could be ratified. Following additional negotiations, in May 2019, the Trump administration lifted the tariffs on steel and aluminum from Canada and Mexico. Closely thereafter, Mexico became the first to officially ratify the deal. The trade press is reporting that Canada will likely be able to ratify the deal but that Prime Minister Trudeau is waiting to see what happens in the U.S. before doing so. It could be a bit more difficult for the U.S. Congress to ratify the agreement – House Democrats have expressed objections to the deal, citing concerns with a lack of enforceable labor and environmental standards. However, the Trump Administration has expressed hope that they can reach a consensus with Congress and pass the new deal.
Stakeholders such as the American Trucking Associations have urged the U.S. to pass USMCA, noting that North American trade is essential to the success of the U.S. trucking industry. They, along with the U.S. Chamber of Commerce, the National Association of Manufacturers, and the American Farm Bureau Federation, among others, note that the new deal is critical to U.S. businesses, workers, and farmers. The new agreement has been criticized by other entities, including the AFL-CIO, for failing to include enforceable labor standards.
Blakey & Agnew, LLC is a public affairs and
communications consulting firm based in
Washington, DC.
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