Trade Update (May 18)
“Buy American” Updates
The Trump administration is preparing an executive order that would require certain essential drugs and medical treatments to be made in the U.S. The draft order is still in preliminary stages and has not been signed off by the president.
“It is critical that we reduce our dependence on foreign manufacturers for essential medicines, medical countermeasures’’ to “ensure sufficient and reliable long-term domestic manufacturing’’ that prevents shortages and supplies to “mobilize our nation’s public health industrial base’’ when needed, says the nine-page draft.
The administration has a wide-ranging supply chain effort underway for products in a variety of sectors seen as national security issues. This includes drugs, medical supplies, semiconductors, and defense equipment.
Trade Adviser Peter Navarro previously proposed a similar order earlier this year that would have streamlined regulatory approvals for “American-made” products and impose similar FDA restrictions on U.S. facilities to those abroad. It also would have encouraged the U.S. government, including the Department of Health and Human Services and Department of Veterans Affairs to only buy American-made medical products.
More than 250 economists, including two Nobel laureates and former members of the Council of Economic Advisers, sent a letter to President Trump and congressional leaders urging against new “Buy American” requirements on medical goods or medicine in response to the COVID-19 health crisis.
“The variety, supply, and price of goods available to Americans will suffer under a broad Buy America regime,” the economists said in the letter. “Taxpayers and patients will pay more for drugs and medical supplies. Smart policies such as federal government stockpiling look more promising.”
The latest coronavirus legislation introduced by Democrats, the HEROES Act, contains a pilot project aimed at improving the availability of personal protective equipment for the National Strategic Stockpile.
A separate provision waives a Buy American requirement for the duration of the coronavirus pandemic that is limited to Washington, D.C., Puerto Rico, the U.S. Virgin Islands, and American Samoa so those entities can purchase protective and medical equipment internationally, if necessary.
Commerce Self-Initiates Circumvention Investigation
On Thursday (May 14), the Department of Commerce self-initiated a circumvention inquiry involving stainless steel products from China that are completed in Vietnam then exported to the U.S. The investigation will focus on whether Chinese producers of flat-rolled stainless steel are circumventing existing tariffs by shipping through Vietnam, where metal is cut into sheets and strips or minorly altered in other ways.
The investigation will also look into whether the steel products from Vietnam fall under the scope of AD/CVD order placed on Chinese imports.
To view Commerce’s press release, click here.
Commerce Rejects Steel Case
The Department of Commerce rejected two requests from Allegheny Technologies (ATI) to exclude a certain type of stainless steel slab from a 25 percent tariff. This marks a victory for three companies that make stainless steel in the U.S. — Outokumpu Americas, North American Stainless, and AK Steel.
The company wanted to import a certain amount and size of steel slab it didn’t produce in its own U.S. mills. For two of the three requests, Commerce said the steel in question was produced in the U.S. by other companies at “a sufficient and reasonably available amount and of a satisfactory quality.”
ATI has said around 100 U.S. jobs in its Midland, PA, rolling plant were dependent on the exclusion. The company made a similar request in 2018, but it was denied.
According to a new report by Harbor Aluminum, Canadian exports of primary aluminum to the United States have risen 30 percent since Trump listed a 10 percent tariff on imports one year ago.
“As a result, U.S. smelters are today underwater and unavailable again,” Harbor said, raising the possibility that the Trump administration might seek to reimpose the duty.
In Trump’s May 2019 declaration lifting the tariffs on Canada and Mexico, he said he reserved the right to, “revisit this determination as appropriate.” Harbor said the new report could renew pressure on U.S. authorities to raise Section 232 tariffs and potentially restrict Canadian exports to the U.S.
To view the report by Harbor Aluminum, click here.
U.S. – China Trade
U.S. exports to China fell by 18 percent in March compared to 2017 levels, indicating a drop in Chinese purchasing.
On Wednesday (May 13), Trump said on Twitter, “As I have said for a long time, dealing with China is a very expensive thing to do. We just made a great Trade Deal, the ink was barely dry, and the World was hit by the plague from China. 100 Trade Deals wouldn’t make up the difference – and all those innocent lives lost!”
However, there is no indication that Trump intends to pull out of the U.S. – China deal signed on January 15, or take any steps to punish Beijing for falling short on implementation.
On Tuesday (May 12), China published a second batch of products to be exempt from U.S. trade war tariffs, effective for one year. There are 79 products in total on the list, including rare earth mineral ores, aircraft radar equipment, semiconductor parts, medical disinfectants, and a range of precious metals, chemicals, and petrochemical products.
 Stein, Shira & Cappicio, Anthony. “Trump Weighs Made-in-U.S. Order for Vital Drugs, Devices.” Bloomberg, 14 May 2020. https://link.edgepilot.com/s/05807ebb/tCKd9Tk5pkm262Bs0EZ-Ig?u=https://www.bloomberg.com/news/articles/2020-05-14/trump-mulls-made-in-u-s-order-for-vital-drugs-devices
 Hirsch, Lauren; Bhattacharjee, Riya; and Tausche, Kayla. “White House preparing executive order requiring certain essential drugs be made in U.S., sources say.” CNBC, 14 May 2020. https://link.edgepilot.com/s/14e5c4cf/Rlu6ASL2bU2ggn7PrFByOQ?u=https://www.cnbc.com/2020/05/14/white-house-preparing-executive-order-requiring-certain-essential-drugs-be-made-in-us-sources-say.html
 Behsudi, Adam. “Economists: Don’t impose medical ‘Buy American’ mandate.” Morning Trade, 13 May 2020. https://link.edgepilot.com/s/af680ae3/tqduydDjwUWe0AxNQNWlqg?u=https://www.politico.com/newsletters/morning-trade/2020/05/13/economists-dont-impose-medical-buy-american-mandate-787571
 Behsudi, Adam. “Democrats call out Trump on tardy usmca.” Morning Trade, 14 May 2020. https://link.edgepilot.com/s/3e7d737c/-EuRjyg_GEWOUqeUTuJriA?u=https://subscriber.politicopro.com/newsletter/2020/05/democrats-call-out-trump-on-tardy-usmca-labor-enforcement-787521
 Bermingham, Finbarr. “China announces new U.S. imports eligible for tariff waivers amid trade war.” Politico Pro, 12 May 2020. https://link.edgepilot.com/s/36de708d/VOhk6E7WSkCz65Io2MrJAA?u=https://subscriber.politicopro.com/article/2020/05/china-announces-new-us-imports-eligible-for-tariff-waivers-amid-trade-war-1935429