Bank of America Merrill Lynch research analysts take a "benign view" of the likelihood of new Section 232 tariffs on the auto sector and an increase to the Section 301 tariffs on goods from China, they said in a Feb. 15 report. Aditya Bhave and Ethan Harris, both global economists at the bank, said that while the Commerce Department seems likely to conclude that auto imports are a national security threat, "sustained auto tariffs" are not expected. "Reasons include delays in the release of the report, the extent of lobbying pressure against the tariffs, and the Trump administration’s hesitance to slap tariffs on consumer products, of which autos are among the most visible," the economists said.
A senator who has not yet signed on to either current Senate bill tackling national security tariffs says he prefers the stronger approach taken by Sen. Pat Toomey, R-Pa. (see 1901310029). Sen. Richard Blumenthal, D-Conn., said in a phone call from Connecticut that he believes that because Toomey's bill requires Congress to act within 60 days to accept or reject new tariffs, it would still allow the tariffs to be used in true national emergencies. Blumenthal said that because the approach taken in the other bill, sponsored by Sen. Rob Portman, R-Ohio, (see 1902060051) -- essentially a disapproval resolution after tariffs are announced, giving Congress power to overrule the president on future Section 232 tariff actions -- it would require veto-proof majorities to change the White House's course. "In this day and age, veto-proof majorities are pretty rare," Blumenthal said.
International Trade Today is providing readers with some of the top stories for Feb. 11-15 in case they were missed.
The U.S. Section 232 tariffs on steel and aluminum should be lifted as soon as possible, Mexico's Undersecretary for Foreign Trade Luz Maria de la Mora said on Feb. 15. "Mexico is not a national security threat to the United States," De la Mora said while speaking at a think tank. Mexico can cooperate with the U.S. in monitoring customs, avoiding transshipment and policing tariff evasion, "all the things that are concerns to the industry and are legitimate concerns," she said.
The mini-Omnibus bill that was signed by President Donald Trump Feb. 15 requires the creation of an exclusion process for the third tranche of Section 301 tariffs by March 17. The third tranche faces a lower tariff than the first two rounds -- 10 percent -- and because of that, the Office of the U.S. Trade Representative has not allowed importers of those items to apply for exclusions. The USTR has to report to the congressional appropriations committees, the House Ways and Means Committee and the Senate Finance Committee, by that date on the status of that process. Before that date, USTR will need to consult with those committees "regarding the nature and timing of the exclusion process," Congress wrote. The same bill also dedicated new funding toward processing Section 232 exclusion requests (see 1902140027).
Sen. Jon Tester, a moderate Democrat who represents Montana and the owner of an 1,800-acre farm, told International Trade Today that he's interested in evaluating both recently introduced bills that would limit Section 232 authority. "The whole trade war stuff is killing us in Montana, just killing us," he said to International Trade Today. "Ag prices are in the tank, and it doesn't matter if you're talking pulse crops, grain, cattle, they're all in the tank." He added, "I'm still in the business. I was sitting last night figuring out what I'm gonna plant ... there isn't anything worth any money." He predicted that farm foreclosures will continue to rise "if we don't get this squared away."
The mini-Omnibus bill to fund a quarter of the government -- including the Commerce Department -- dedicated $3 million more for the Bureau of Industry and Security than was spent in the last fiscal year, for a total of $118,050,000. The White House had asked for $120 million, with a little over $4 million of that for Section 232 exclusions, to hire 13 staffers and subcontractors to handle the flood of requests. The conferees said that they agreed to language "to ensure that the additional resources above enacted for BIS are devoted to an effective Section 232 exclusion process."
The approach to a future bill that would give Congress the ability to intervene on Section 232 tariffs will depend on what version can get the broadest bipartisan support, Senate Finance Committee Chairman Chuck Grassley, R-Iowa, told reporters Feb. 13. He said he doesn't have his mind made up on what has to be in the bill to constrain Section 232 actions. He said his staff is "moving very quickly" to put together a bill that "shows the appropriate respect to [Sen. Pat] Toomey and to [Sen. Rob] Portman," Republican committee members who have each authored bills that would constrain the president on the tariffs (see 1901310029 and 1902120033)
Senators across the political spectrum -- from Sen. Dianne Feinstein, D-Calif., to Sen. Roger Wicker, R-Miss. -- see levying national security tariffs on imported automobiles as "a step too far," Ohio Republican Sen. Robert Portman said, and he believes his bill, S.B. 365 on Section 232 tariffs could pass Congress and avoid a presidential veto.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said that neither Mexican nor Canadian politicians will ratify the new NAFTA as long as those two countries are subject to U.S. Section 232 steel and aluminum tariffs. Grassley, who was speaking to reporters on a conference call Feb. 12, has said in the past that Canadian and Mexican retaliatory tariffs reacting to those tariffs have to be lifted in order to get the new NAFTA through Congress (see 1901090041).