With the Trump Administration’s unprecedented use of Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 to impose tariffs, and the renegotiation of the North American Free Trade Agreement—now the United States-Mexico-Canada Agreement—it has been a tumultuous year for trade in the United States and globally.
The imposition of Section 232 and 301 tariffs, the ongoing Section 232 investigation into auto imports, and the reopening of trade agreements, among other developments, have created an increasingly complex trade landscape for U.S. businesses to navigate. While the real economic impact of these tariffs and current trade tensions may not be felt yet, they have already disrupted global supply chains, and added to the cost of doing business.
Under the Section 232 tariffs on steel and aluminum, nearly all steel and aluminum imported in to the United States now faces additional 25 percent and 10 percent tariffs, respectively. While the Trump Administration has allowed the U.S. Department of Commerce to grant exclusions to these tariffs on case-by-case basis, as of Sept. 6, Commerce had received over 39,000 exclusion requests from U.S. parties but had only posted decisions for over 4,000. The lengthy and time-consuming process to submit exclusion requests has drawn criticism from both U.S. industry and lawmakers.
Separately, President Donald Trump has also imposed three tranches of tariffs on Chinese goods pursuant to Section 301 of the Trade Act of 1974, the most recent of which went into effect on Sept. 24 and is set to increase on Jan. 1, 2019. Similar to other countries, China has retaliated with its own tariffs on U.S. products, and the escalating trade tensions have left several U.S. industries, including the energy and agricultural sectors, deeply concerned.
President Trump and his trade team also remain focused on trade reciprocity and reduction of trade deficits, one of their top priorities in the renegotiation of NAFTA. While the new United States-Mexico-Canada Agreement maintains the core duty-free trade between the three countries, there were important updates to the automotive rules of origin, investor-state dispute settlement, agricultural market access, and digital trade, among other changes. Notably absent, however, was a resolution of the current Section 232 tariffs for steel and aluminum on Mexico and Canada. While side letters detailing procedures for Section 232 measures moving forward accompanied the agreement, the failure to lift Section 232 tariffs on steel and aluminum for Mexico and Canada suggests the Trump Administration may intend to continue implementing a trade policy based on strong trade enforcement actions.
With November mid-term elections quickly approaching and the results of the Trump Administration’s ongoing Section 232 investigation into auto imports expected in the coming months, 2019 is likely to be another year of significant changes for trade.
Frank Samolis is the co-chair of the International Trade Practice and David Stewart is a principal at Squire Patton Boggs. Samolis handles matters before the Office of the U.S. Trade Representative, other Executive Branch Trade agencies, the U.S. International Trade Commission, U.S. Court of International Trade, U.S. Customs Service and Congress. Stewart is the former majority staff director for the House Committee on Ways and Means. Learn more about the impact by the trade tariffs by downloading the Squire Patton Boggs Tariff Book.