Companies have been on high alert since hearing about a potential shutdown of the US-Mexico border. Although President Trump does not appear to be actively taking steps to close the border, the administration has taken actions to address the migrant situation on the southern border that is disrupting global supply chains. To avoid delays, importers should, among other things, have accurate documentation and check with local port directors for any developments.
The Office of the United States Trade Representative recently announced that it is initiating an investigation under Section 301 of the Trade Act 1974 to enforce the United States' rights in the World Trade Organisation dispute involving subsidies provided to the large civil aircraft industry by the European Union. The investigation may result in tariffs of up to 100% on certain imports from the 28 EU member states as soon as 1 June 2019.
Following a meeting with Chinese Vice Premier Liu He, President Trump announced plans for an "epic" trade deal with China. However, to date, Trump has declined to set a date for a signing summit with President Xi Jinping to hammer out a final trade agreement, for which the Section 301 tariffs have emerged as a sticking point. China has demanded that the tariffs be removed as part of any final deal, while the White House hopes to use the tariffs as leverage to ensure compliance.
While various news accounts have now indicated that President Trump will not close the US-Mexico border, the administration will take further actions. As such, there will likely be a slowdown in border processing and longer wait times at all land ports of entry on the Mexican border for an extended period. Among other things, importers are advised to factor in that wait times will markedly increase or even double.
The Department of Commerce recently announced that it had formally submitted to President Donald Trump the results of its investigation into the effect of imports of automobiles and automobile parts on the national security of the United States. With this announcement, the global automotive industry was put on high alert of a potential new US import tariff aimed directly at the products that they sell.
US Trade Representative Robert Lighthizer recently announced the Trump administration's intention to leave companies subject to the 10% tariff rate under Section 301 List 3 of the Trade Act 1974 without an exclusion process. In addition, due to the ongoing federal government shutdown, further delays are anticipated with the review of exclusion requests relating to Section 301 List 1 and Section 301 List 2.
In 2017 the United States agreed that it was time to modernise the 24-year-old North American Free Trade Agreement pact, launching months of negotiations that recently ended. When it comes into force, the United States-Mexico-Canada Agreement (USMCA) will strengthen national treatment protections for the covered financial services industry in the United States. This is set to take place throughout 2019, with the USMCA possibly coming into force in early 2020.
If the turbulence of 2018 caused business executives grief, 2019 is unlikely to provide much relief – particularly in light of the United States-Mexico-Canada Agreement. Further, Section 232 tariffs on many steel and aluminium imports are likely to continue throughout 2019, as will Section 301 tariffs on more than $200 billion worth of Chinese imports. Finally, the administration has announced its intent to start talks on new trade pacts with the European Union, the United Kingdom and Japan.
Following weeks of negotiations, US Trade Representative Robert Lighthizer has published the agreed text of the US-Mexico-Canada Agreement (USMCA), which is slated to replace the 24-year-old North American Free Trade Agreement with what the parties have called "a 21st century, high-standard agreement". While the USMCA text has answered many questions, a number of issues will need to be fleshed out during the implementation phase.
The United States and Mexico recently announced an agreement regarding key issues that have been the focus of trilateral discussions between the United States, Mexico and Canada for over one year. Although no text is yet available, the Office of the United States Trade Representative has released fact sheets addressing certain aspects of the preliminary agreement in principle.
A US trade representative recently issued a statement advising that President Trump had directed him to consider raising the previously proposed 10% additional duty to be applied to $200 billion worth of Chinese goods (referred to as the List 3 products) to 25%. Importers are urged to review their imports from China and, if they are importing any of the products on List 3, to consider, at a minimum, filing written comments and possibly appearing at the scheduled public hearing.
The United States Trade Representative recently released the procedures for filing exclusion requests for List 1 products subject to the 25% tariff pursuant to Section 301 of the Trade Act 1974. On the same day, China confirmed its retaliatory tariffs, prompting the Trump administration to publish a new list of products, proposing an additional 10% tariff on 6,031 product lines worth approximately $200 billion. Companies are urged to be strategic in considering a request for exclusion.
The United States Trade Representative (USTR) recently released two product lists relating to Section 301 duties. The first list is a culmination of a process that started on 13 April 2018, when the USTR published an initial list of products that would be subject to an additional 25% ad valorem tariff. The second list contains 284 additional product lines that will now undergo further review. Pharmaceutical products, textiles, apparel and footwear do not appear on the two recently released lists.
The secretary of the treasury recently stated that the United States was "putting the trade war on hold" pending negotiations with China to reduce the US trade deficit and address certain acts, policies and practices relating to IP rights. He subsequently clarified that his comments referred only to the proposed 25% tariff pursuant to Section 301 of the Trade Act 1974. These comments have raised questions regarding the status of the various safeguard tariffs announced by the Trump administration.
Canadian business leaders greeted President Trump's announcement that the exemptions for Canada (and Mexico) from the double-digit Section 232 tariffs on certain steel and aluminium imports will be extended. What happens next is anyone's guess, and no company should feel comforted. Company executives will need to stay well apprised of their cross-border transactions and take all necessary steps to mitigate the risk of border delays, import audits or North American Free Trade Agreement verifications.
Following the presidential proclamations regarding the imposition of double-digit tariffs on certain steel and aluminium imports (ie, the Section 232 tariffs), the US Customs and Border Protection (CBP) has published further guidance detailing their implementation. Given the complexity of these tariffs and the scrutiny that the CBP will be applying to imports of steel and aluminium from all countries, importers should consider compliance with these trade actions to be a high-risk area.
US Customs and Border Protection recently published guidance for claiming refunds on duty preference claims made under the Generalised System of Preferences (GSP) between the programme's expiration and the implementation date of its reauthorisation. The GSP programme promotes economic growth in developing countries by providing duty-free treatment of certain products imported from designated beneficiary countries.
President Trump recently signed a memorandum that marks the start of a multi-faceted trade offensive against China. The memorandum is designed to respond to the administration's findings of misappropriation of US intellectual property and discriminatory technology licensing practices. In addition, the administration instructed the Treasury Department to propose restrictions on investment in the United States by Chinese-controlled entities and funds in certain industries or technologies.
Now that President Trump has made his determination on the tariffs to be applied as a result of the Section 232 investigations of certain imports of steel and aluminium products, boardrooms around the globe are pondering the short and long-term implications for their corporate bottom lines. Section 232 investigations have been rare and thus little legal precedent is available for guidance. That said, there are 10 questions worth considering.