Trade Update (May 4)
No Retaliation in Sight Against China, Kudlow Says
On Friday (May 1), Chief White House Economic Adviser Larry Kudlow said he did not see any rush by the Trump administration to impose more tariffs on China. “With respect to future tariff decisions and other measures, that’s going to be up to the president,” Kudlow said on CNBC.
“I don’t think there’s any rush right now. Our efforts here are to, first of all, get this virus down, open up the economy, get folks back to work. Let’s get some economic growth back,” he added.
On Thursday (Apr. 30), The Washington Post reported that the Trump administration was considering ways to retaliate against China because of the coronavirus pandemic. However, both Kudlow and Trump said that option was not on the table.
Kudlow also stressed the importance of preserving the Phase One deal the U.S. signed with China in January. He cited the recent positive comments from the Office of the U.S. Trade Representative (USTR) about China’s progress in implementing the terms of the agreement as reason to hold off on retaliatory measures.
Commerce is seeking public comment on a new system for monitoring imports of aluminum, similar to a pre-existing program for steel imports. The proposal would come with an import license requirement that would obligate applicants to identify where the primary aluminum used in imported aluminum products was smelted and poured.
Aluminum Association Blasts 232 Exclusion Process
On Monday (Apr. 27), the Aluminum Association put out a statement criticizing the Commerce Department’s management of the Section 232 exclusion process for aluminum.
“At a time when the U.S. is looking to shore up domestic manufacturing supply chains, the Commerce Department’s current approach encourages the opposite,” Tom Dobbins, the group’s president and CEO, said in a statement.
“There is a level of gamesmanship happening — importers are asking for huge volumes of exclusions, which are so large that no single domestic producer could possibly meet, and then using the granted exclusions as leverage in negotiations,” said Lauren Wilks, the association’s vice president for policy and international trade.
To view the Aluminum Association’s statement in full, click here.
Washington lawmakers are also blaming aluminum job layoffs on President Trump’s “failure” to achieve meaningful reductions in China’s aluminum-producing capacity over the past two years.
“It is evident that your administration’s approach to Chinese overcapacity so far has not had its intended effect and we urge you to prioritize resolving this issue,” Democratic lawmakers said in a letter to Trump on Thursday (Apr. 30).
USTR Notice On Tariff Exclusions
USTR is considering a one-year extension of tariff exclusions. The move would apply to some products excluded from the 25 percent tariffs that Trump imposed on Chinese goods in two initial batches. “The focus of the evaluation will be whether … the particular product remains available only from China,” USTR said in a Federal Register notice. USTR asked for public comment on the idea before June 1, and said it would evaluate exclusions on a case by case basis.
The view the Federal Register notice, click here.
Domestic Steel, Aluminum Producers Announce Layoffs
In a filing on Thursday (Apr. 30), U.S. Steel Corp. said it sent out notices of plans for layoffs to 6,500 employees, but expects the actual number affected to be about 2,700.
At the start of 2020, the company had about 27,500 employees on its payrolls. U.S. steel will also lay off an additional 1,000 employees in Europe, accelerating the timeline of previously announced reductions due to the coronavirus pandemic.
U.S. Steel has cut spending and increased its borrowings under a revolving credit facility, and the company reported an adjusted loss of 73 cents in the first quarter. CEO David Burritt said the market is in “search of bottom” in the second quarter.
Elsewhere, U.S. aluminum giant Alcoa announced last week that it would be laying off as many as 700 employees because of the surplus in global supplies and drop in prices.
Canary CEO Asks for Tariff Relief
On Thursday (Apr. 30), Canary CEO Dan Eberhart, a prominent donor to both President Trump and the Republican Party, wrote a letter to the president urging him to lift tariffs on steel and other manufactured goods.
“Our company is spending roughly $80,000 a month in direct and indirect payments on tariffs, and the total will likely top $1 million in 2020,” Eberhart said in the letter.
“Only about 20 percent of that amount is paid directly – $206,263 in tariffs in 2019 and $44,383 in duties. However, the indirect costs are far higher due to the increased prices we have to pay our domestic suppliers in Houston that must also rely on Chinese importers and providers of raw materials,” he added.
 Palmer, Doug. “Kudlow sees no rush for more China tariffs.” Politico Pro, 1 May 2020. https://link.edgepilot.com/s/e788a4a0/NMWyMWgJHUKdq1TTXtM_Sw?u=https://subscriber.politicopro.com/article/2020/05/washington-lawmakers-blame-trump-for-aluminum-job-layoffs-3980049
 Palmer, Doug. “Washington lawmakers blame Trump for aluminum job layoffs.” Politico Pro, 1 May 2020. https://link.edgepilot.com/s/e788a4a0/NMWyMWgJHUKdq1TTXtM_Sw?u=https://subscriber.politicopro.com/article/2020/05/washington-lawmakers-blame-trump-for-aluminum-job-layoffs-3980049
 Deaux, Joe. “U.S. Steel Portends More Blue-Collar Pain With 2,700 layoffs.” Bloomberg, 1 May 2020. https://link.edgepilot.com/s/7d78fd9a/a5Vh4wbcSEa27VF_dWMsxg?u=https://www.bloomberg.com/news/articles/2020-04-30/u-s-steel-announces-more-closures-and-expects-2-700-layoffs?sref=UPVmyKWl