News: White House de minimis action only a 'first step'

Monday, September 16, 2024

White House de minimis action only a 'first step'

Sep 16, 2024

With help from Doug Palmer

A steel plant is shown.

New White House reforms are no substitute for Congress’ duty to close the so-called de minimis “loophole,” said lawmakers and industry groups. | Al Behrman/AP | AP Photo

QUICK FIX

— Lawmakers and major U.S. industry groups say the White House’s de minimis action doesn’t negate the need for more comprehensive reform from Congress.

— The U.S.-China Business Council and other groups that do business abroad pushed back on the Biden administration’s plans to raise tariffs on Chinese imports.

— The White House appears to be delaying its plan to block Nippon Steel’s takeover of U.S. Steel amid concerns about the economic fallout and pushback from GOP lawmakers.

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Driving the day

NEXT STEPS ON DE-MINIMIS: Lawmakers from both sides of the aisle and U.S. industry groups praised the Biden administration’s new tariff action to address the “overuse and abuse” of the de minimis provision, which has been blamed for causing a flood of cheap imports from China.

But the proposed reforms, they said, are no substitute for Congress’ duty to impose comprehensive restrictions and close the so-called de minimis “loophole,” which waives tariffs on shipments under $800.

Reminder: White House officials said Friday that they are launching a new regulatory process to remove de minimis treatment on imports subject to Section 301, Section 201 and Section 232 tariffs, some of which were put in place by former President Donald Trump. They also called on Congress to take more action on the provision before the end of the year.

Some lawmakers quickly seconded that ask.

“This is only the first step and does not negate the need for Congress to act on a comprehensive solution,” Reps. Earl Blumenauer (D-Ore.) and Rosa DeLauro (D-Conn.), said on Friday, after praising the Biden administration’s announcement.

Up next: One House aide close to discussions, told Morning Trade that Democrats are eyeing the lame duck as the next most likely vehicle to move a de minimis fix.

Ways and Means Committee Chair Jason Smith (R-Mo.) agreed with the need for further action and pointed to similarities between the White House order and a measure introduced by Rep. Greg Murphy (R-NC) and advanced by the committee in April. (However, the proposal remains stalled after failing to receive support from the committee’s Democrats, who didn’t think it went far enough to eliminate the “loophole.”)

“They say imitation is the highest form of flattery, so I am pleased Democrats in Washington are once again acknowledging that Republicans’ tough-on-China trade policy works,” he said in a statement Friday.

The largest federation of unions, AFL-CIO; the National Council of Textile Organizations; and the Coalition for a Prosperous America — all of which have pushed for increased tariff protection — echoed a similar call for Congress to pick up where the administration left off.

The Alliance for American Manufacturing even called out House lawmakers for failing to bring legislation on de minimis to a vote during a so-called China Week — despite Speaker Mike Johnson laying out expectations for action on both de minimis and outbound investment by year’s end.

Still, other groups were less impressed by the White House’s action. The Information Technology Industry Council warned the administration against “overly broad restrictions that could lead to significant supply chain delays or unintended harms.”

REGULATORY REVIEW

AND ON SECTION 301: The Biden administration on Friday said its plan to quadruple tariffs on Chinese electric vehicles to slightly more than 100 percent will take effect Sept. 27. It also announced that its proposed increase for tariffs on ship-to-shore cranes used to load and unload goods would be modified to exclude cranes ordered before May 14.

The tariff increases are drawing criticism from groups that do business abroad. The U.S.-China Business Council, which represents more than 270 American companies that do business in China, warned that Section 301 tariffs have not changed China’s non-market practices. The Council said that it is “unclear how continuing such tariffs and adding new ones will accomplish that goal — which is why USCBC is disappointed.”

National Foreign Trade Council Vice President Tiffany Smith delivered similar criticism and said Section 301 tariffs have “created an average annual tax increase on every U.S. household of $625” as Americans suffer from high inflation.

“A trade war never benefits anyone,” added National Association of Manufacturers Vice President of International Policy Andrea Durkin in a statement that went on to criticize both of the White House’s announcements on Section 301 tariffs and de minimis.

TTC IDEAS SOUGHT: The United States and the EU held six ministerial-level meetings of the bilateral Trade and Technology Council over the past three years without a whole lot of blockbuster achievements on the trade front.

So far, no date has been set for a seventh meeting. But in a strong indication the Biden administration hopes to continue the TTC, the office of the U.S. Trade Representative recently asked for public comment on how the two sides can expand trade in a mutually beneficial manner and work together to address the non-market practices of countries like China. Those comments are due by Oct. 21.

Around the World

NO ON NIPPON (FOR NOW): The White House said its decision to block Nippon Steel’s acquisition of U.S. Steel could not be “imminent” — a delay that comes amid growing concerns over the economic fallout of killing such a deal and resistance from Republican lawmakers.

White House press secretary Karine Jean-Pierre shared the update during her daily news briefing on Friday and said the White House has yet to receive a recommendation from the Committee on Foreign Investment in the United States. The interagency group examines foreign investments for potential threats to national security.

Key context: Biden has expressed opposition to Japanese-owned Nippon taking over U.S. Steel, saying the company should instead remain American owned.

But in recent weeks, Republican lawmakers have charged that the president’s opposition could be politically motivated. Chair of the House Select Committee on China, John Moolenaar, also told your host that Japan’s relationship with the U.S. should be more closely considered.

CHINA IRA DISPUTE: China will renew its request for a WTO dispute settlement panel to hear its complaint against various provisions of the Inflation Reduction Act, according to the agenda for the Sept. 23 WTO Dispute Settlement Body meeting.

The United States blocked China’s first request in late July, a common practice in trade disputes at the WTO, but will not be able to block a second request for a panel to be formed.

USTR issued a Federal Register notice in late August asking for input on the case by Sept. 26 — a sign that the Biden administration is preparing for litigation.

TRADE OVERNIGHT

— Wall Street wins in GOP stalemate on China, POLITICO’s Morning Money reports.

— Sens. John Hickenlooper and Thom Tillis to unveil bipartisan legislation to boost U.S. action on minerals, per POLITICO Pro.

— China opposes U.S. tariff hikes, vows steps to defend its firms' interests, per Reuters.

— TikTok launches fight for its life in court, per POLITICO Pro.

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