#1 – 301 TARIFFS: WHAT PRODUCTS WILL BE HIT AND WHEN
On Thursday, the Trump administration surprised anyone who wasn’t listening when he said that trade wars are “good and easy to win” by following through on imposing tariffs of 25% on over a thousand Chinese imports. Below are the key resources you need to know what products the U.S. tariffs are on and when they’ll go into effect. For more on the political implication see below (#3).
• The first set of tariffs is listed here: https://ustr.gov/sites/default/files/enforcement/3…
• This list contains 818 lines ($34 billion in goods), which, as the Administration signaled, is a “subsection” of the 1,333 lines that USTR first proposed in April. Customs and Border Patrol (CBP) will begin to collect these duties on July 6th.
• The second set of tariffs includes 284 product lines ($16 billion in imports) that have now been identified by the interagency section 301 Committee. These are lines that have been identified as benefitting “Made in China 2025.” The second list of tariffs is here: https://ustr.gov/sites/default/files/enforcement/3…
• The second list will go through an additional public notice and comment period, as well as a public hearing, before they are imposed.
• The President’s statement on the tariffs can be found here: https://www.whitehouse.gov/briefings-statements/st…
• Most important line from the President’s statement: “The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China.”
• What that line means: This could be referencing the additional $100 billion in tariffs that is working its way through the interagency process; it could mean reviving the tariffs that were on the April list that have now been left off; or it could mean both.
• A fact sheet from USTR on the 301 timeline can be found here: https://ustr.gov/about-us/policy-offices/press-off…
• An additional fact sheet on the Section 301 process (investigation and response) from USTR is here – https://ustr.gov/about-us/policy-offices/press-off…
#2 – HOURS AFTER, ON THE OTHER SIDE OF THE WORLD, CHINA RESPONDS WITH THEIR $34 BILLION LIST
• It didn’t take long for China to retaliate. In fact, within hours, the Chinese foreign ministry was out with a list of 545 products that matched dollar-for-dollar the $34 billion list the U.S. released. The Chinese tariffs on American exports are also 25% and will also be imposed beginning on July 6th.
• A link to an unofficial translation of the Chinese list is HERE.
• Unsurprisingly, the Chinese tariffs target American agricultural exports, including soybeans, corn, wheat, poultry, beef, and pork. The list is also heavy on autos and auto parts in what is clearly a rust belt and heartland political strategy.
• The Chinese also announced their own second set of tariffs that would be imposed at a later date that focus on energy tariff lines like coal and gasoline.
• The official Chinese line from Lu Kang, a spokesman from the Chinese Foreign Affairs Ministry: “It is deeply regrettable that in disregard of the consensus between the two sides, the U.S. has demonstrated flip-flops and ignited a trade war. This move not only hurts bilateral interests, but also undermines world trade order. The Chinese side firmly opposes that.”
• Could this all be pretext for a U.S.-China deal? Inside U.S. Trade explores that question HERE.
#3 – THE POLITICAL & BUSINESS REACTION
• Ways and Means Chairman Kevin Brady came out quickly on Friday morning expressing his concern (Finance Committee Chairman Orrin Hatch released a similar statement):
• But there was a good deal of support from lawmakers on both sides of the aisle. Those who came out to applaud the President’s action focused on Chinese IP abuses. Senator Marco Rubio, who President Trump famously rebranded as Little Marco, attempted to rebrand tariffs as a #TheftTax:
• Democratic Senate Minority Leader Chuck Schumer called the tariffs “on the money”:
• Meanwhile, a variety of business and trade organizations expressed their concerns. The National Retail Federation and Chamber of Commerce reactions were representative of downtown opposition to the tariff measures.
#4 – ZTE AND CORKER AMENDMENTS CREATE GOP DRAMA ON DEFENSE BILL
• ZTE: Senators Chris Van Hollen and Tom Cotton were able to successfully attach their amendment blocking the Trump Administration’s ZTE deal to the must-pass Defense Authorization bill, which the Senate will vote on next week.
• GOP lawmakers who opposed the amendment however are insisting that the amendment’s inclusion means that a brokered compromise will be needed, while the White House is indicating that the amendment will be killed in conference. The White House has also claimed the amendment violates the separation of powers. More from the Washington Post HERE.
• Corker: Meanwhile, Senator Corker, who is continuing to champion his amendment to create a Congressional review process for 232 trade actions, was blocked from attaching his amendment to the Defense bill. More on the from The Hill HERE.
#5 – 232 HEARING WITH SECRETARY ROSS SET FOR TUESDAY
• Commerce Secretary Wilbur Ross is set to testify this Wednesday in front of the Senate Finance Committee on Section 232 tariffs on steel and aluminum. Look for some fireworks on the expansion of the tariffs to Canada and Mexico from ag state Republicans, as well as some rehashing of the wild G7 in Quebec.
• The June 20th hearing was announced soon after the expansion of 232 with Finance Committee Chairman Orrin Hatch saying: ”I have made no secret of my concerns with the administration’s use of 232 tariffs. These tariffs are ultimately paid by American consumers and cause harm to American manufacturers, undermining the success of tax reform.”