#1 – ANOTHER WEEK, ANOTHER $200 BILLION
• On Tuesday, the Trump Administration followed through on threats to unveil new tariffs on Chinese imports as a penalty for China retaliating for the $34 billion in U.S Section 301 tariffs. The list of planned 10% tariffs – which is available HERE – is valued at $200 billion. HERE is a statement from USTR on the new tariffs.
• When? According to the notice and comment period information released by USTR, the tariffs would not be put into place until sometime after August 30th. There will be an 8/17 due date for written comments, a multi-day public hearing starting 8/20, and a 8/30 due date for rebuttal comment.
• Is this the end of new Section 301 tariffs? Unlikely. The U.S. still has a second list of tariffs from the original $50 billion (valued somewhere around $16 billion) against which China would retaliate, in addition to possible retaliation from the threatened $200 billion. Many trade watchers believe that, absent a deal in the coming weeks/months and when the smoke clears in late 2018, nearly every Chinese import could have some new tariff added.
• Read more from NY Times coverage HERE.
#2 – CHINA ISSUES STATEMENT WARNING OF RETALIATION AFTER U.S. RETALIATION FOR CHINA’S RETALIATION FROM U.S. 301 TARIFFS ORIGINALLY IMPOSED AS RETALIATION FOR IP THEFT (GOT IT?)
• The bottom line, there is no end in sight to further U.S.-China escalation. As expected, shortly after the additional $200 billion was announced, the Chinese Ministry of Commerce issued a statement making clear that retaliation was on the way. It reads, in part:
“It is totally unacceptable for the American side to publish a tariff list in a way that is accelerating and escalating. To protect the core interests of the nation and its people, the Chinese government will be forced to impose necessary countermeasures.“
• What to watch for: Given that the next round of tariffs won’t be imposed until early September, the Chinese have time to come up with another list of retaliatory items to hang over the U.S. midterm elections. The Chinese will also likely impose non-tariff countermeasures, some of which they are already using, including slowing customs on U.S. imports and imposing additional inspections on items like U.S. produce.
• Read more on China’s internal calculations on retaliation HERE.
#3 – SENATE ADVANCES NON-BINDING “MOTION TO INSTRUCT” ON 232
• On Wednesday, after being thwarted by Senate leadership in his quest to assert Congressional authority over Section 232 trade actions, Senator Bob Corker (along with Senators Toomey and Flake) was able to get a compromise, non-binding “motion to instruct” vote. The symbolic 88-11 vote was spun as a test vote by Corker and his allies. In a statement following the vote, Corker vowed to push for a binding vote. More HERE.
• The bottom line: The vote shows there is a veto-proof majority (at least when the consequences aren’t real) in the Senate – but over in the House, Speaker Ryan warned (after a bill similar to Corker’s was introduced there) that he is disinclined to bring similar legislation up because he doesn’t believe there is a veto-proof majority in his chamber. In the weeks to come, as stories of tariff pain roll in from across the country, the big question remains: might lawmakers in tough districts start demanding a binding vote to protect themselves in close races?
#4 – POLITICO FACT CHECKS TRUMP TWITTER CLAIM THAT FARMERS HAVE “DONE POORLY”
On Wednesday, President Trump put forward the highly suspect claim that farmers have been doing poorly for the last 15 years – ostensibly because of U.S. trade policy.
• POLITICO called the President out in coverage, citing readily available info from the Congressional Research Service. According to POLITICO’s story:
“U.S. agricultural exports have mostly been on the rise and a “major contributor to farm income,” particularly since 2005, according to the Congressional Research Service. Farmers, ranchers and agribusinesses are expected to send nearly $143 billion worth of products overseas this year, resulting in a trade surplus of about $21 billion. Agricultural trade has more than tripled over the last 30 years with economic and population growth globally.”
• Backstory: Trump is feeling the heat from farmers and ag state members of Congress. According to Senator Pat Roberts, USDA has also not come up with any details on a promised mitigation plan that would purportedly pay farmers to make up the cost of tariff increases. The Administration’s political team knows they have built tremendous trust with farmers, but they’re not sure just how long it will last. Expect Trump to continue to make these types of misleading statements more regularly in an attempt to reassure farmers.
#5 – HEARING WATCH
Look for two hearings this week to create some buzz.
• Wednesday, 7.18 at 2 PM – Ways and Means Trade Subcommittee: This will be an opportunity for House Ways and Means members – particularly Republicans – to channel some of their frustrations about the President’s trade policy’s impact on farmers – one of their key constituents. Look for Committee Chairman Dave Reichert to be particularly aggressive, given that he is retiring in a little over three months and has no reason to pull punches. We hear there will be a farmer from his neck of the woods (think WA state fruit exports), as well as farmer representation from other commodity groups across the country. Read a statement from Chairman Reichert on the hearing HERE.
• Thursday – ALL DAY – Department of Commerce Hearing on Proposed Automotive 232 Tariffs: Look for all of the major auto industry groups – including the Global Automakers, American Automotive Policy Council and the Motor and Equipment Manufacturers Association – to come out swinging against potential 232 (national security threat) tariffs on auto imports. The hearing should be a good gauge of how large a public relations war the auto industry might unleash against the Trump Administration over 232 tariffs. If the auto industry decides to invest heavily in beating back the tariffs, it could have a major impact in swing elections in the upper Midwest and into the 2020 cycle. More on the hearing HERE from Reuters.
Prepared by Matt McAlvanah (matt@monumentpolicy.com) and the Monument Trade Team