On The Hill

US – China Trade War

On June 15^th, after the completion of the Section 301 investigation, USTR announced it would levy 25% tariffs on $34 billion worth of Chinese imports.  An additional $16 billion worth of imports would “undergo further review and a public comment period.”

On June 18^th, the President directed USTR to identify $200 billion worth of Chinese goods to levy an additional tariff of 10%.

This week (1 Aug), Trump directed USTR to consider increasing the tariffs of 10% on $16 billion worth of goods to 25%.  Lighthizer stated that the move “is intended to provide the Administration with additional options to encourage China to change its harmful policies and behavior.”  With the increased tariff, the public comment period for the $34 billion worth of imports has been extended to September 5^th, 2018.

In response on Friday (3 Aug), China announced it would impose duties ranging from 5% – 25% on over 5000 US products totaling $60 billion.  Neither country has officially levied the additional proposed tariffs, but this recent exchange shows that tensions are still high.  However, reports have surfaced that USTR Steve Mnuchin and Chinese Vice Premier Liu He are “having private conversations as they look for ways to reengage in negotiations.”  Previous talks were halted after Trump decided to impose the tariffs on $34 billion worth of imports.

NAFTA

Democratic House members sent a letter to President Trump urging him to keep NAFTA trilateral.  They stated that if he wishes to negotiate independent deals with Canada and Mexico, he “would be required to submit a new and different notification to Congress, in order for Trade Promotion Authority procedures to apply.”  The letter was sent after reports surfaced that Trump would be open to negotiating separate bilateral agreements with Mexico and Canada.

Mexican officials have been in Washington since Tuesday (31 July).  Their talks have focused on the auto trade including rules of origin, content rules, and what proportion of the auto must be produced by workers making a living wage.

Canadian Foreign Minister Chrystia Freeland traveled to Mexico City to speak to the Mexican negotiating team last week (27 July).  She told reporters that Canada will re-enter the talks once the US and Mexico resolve their auto issues.  According to Economy Minister Ildefonso Guajardo, “there were very good probabilities” Mexico and the US would resolve key issues as early as next week.

The contentious issues still include the sunset provision and the dispute settlement process.  However, Mexico’s chief NAFTA negotiator tweeted, “we will continue working on all chapters of the negotiation and will look to close out the modernization chapters that are 80-90 [percent] finished: Customs & Trade Facilitation; Environment, Financial Services; Textiles; Energy; Digital Trade; among others.”

Congress and Trade Authority

A bipartisan group of senators led by Rob Portman (R-OH) introduced the “Trade Security Act of 2018” on Wednesday (1 Aug).  Under the Trade Expansion Act of 1962, the Commerce Department conducts the investigation on whether imports pose a threat to national security.  The bill would amend the Trade Expansion act to require that the Department of Defense (DoD) lead the investigation, and if DoD determines there is a threat, only then would the Commerce department would determine “an appropriate remedy.”  It would also give Congress the power to pass a joint resolution of disapproval and would require Congress be consulted throughout the investigation process.

Senator Michael Bennet (D-CO) introduced a bill that would “reverse the tariffs President Trump imposed on all steel and aluminum imports from Canada, Mexico, and EU countries.” Originally, it was proposed as an amendment to the National Defense Authorization Act, but was reintroduced as a standalone bill on July 18^th.

These recent bills are similar to the one introduced by Senators Bob Corker (R-TN), Jeff Flake (R-AZ), and Pat Toomey (R-PA) soon after Trump decided to levy steel and aluminum tariffs on US allies on June 1^st.

CP-TPP

Americans for Prosperity, Freedom Partners Chamber of Commerce, and the LIBRE Initiative sent a letter to President Trump congratulating him on his economic policy accomplishments including tax reform and the removal of burdensome regulations.  Additionally, they urged Trump to rejoin the CP-TPP.  They argued that joining the CP-TPP would open more markets to American producers and save them from the escalating trade war with China.  Additionally, it would provide another forum to address China’s unfair IP and technology practices.

Section 232:  Uranium

The Commerce Department announced that the public comment period will be open until September 10, 2018.   They are particularly interested in comments and information related to the importation of uranium, domestic production and capacity to meet national defense requirements, availability of resources, the impact of foreign competition on the industry, loss of revenue, investment, or substantial unemployment, and other relevant factors. Unlike previous 232 investigations, there will not be a public hearing.