May at-a-glance … taxes, tariffs & trade

Wisconsin Senator Johnson wants to hear from NAFEM members

Expressing continued concern about the impact of tariffs on American business, Wisconsin Senator Ron Johnson (R-WI) has asked for impact statements from NAFEM members. In 300 words or less, Senator Johnson is interested in understanding how Section 232 steel and aluminum tariffs, Section 301 tariffs on import from China, or retaliatory tariffs are impacting NAFEM member’s businesses. Completed impact statements should be sent to staffers Josh McLeod and Annie Chestnut. Statements may be made public.

Tariffs expected to continue in foreseeable future

“The notion that the Biden administration would be diametrically opposed to the Trump administration on tariffs and protectionism has no basis in the history of Joe Biden’s political career,” said Josh Zive, senior principle, Bracewell LLP and the Coalition of American Metal Manufacturers and Users (CAMMU). “All through the protectionism wars of the 1980s, Biden was the Democrat who spoke for manufacturing and argued for protectionism. His approach to trade is to fight for fairness and protect American industry.”

Zive and Bracewell’s Paul Nathanson, senior principal, shared their perspectives on tariffs during a recent NAFEM Wednesday Webcast. “The whole purpose of a tariff is to allow a domestic industry to raise prices, but in this case, the tariffs also are affecting the ability of the domestic steel industry to meet demand because imports are way down.”

The goal of the Section 232 steel and aluminum tariffs was to return the domestic steel industry to 80 percent capacity. Before the pandemic, the industry hit this rate consistently; since the pandemic it has recovered to almost 78 percent of capacity. However, according to Nathanson and Zive, until the Biden administration has a pan-European or even global trade strategy, they are unlikely to pull back from the Section 232 tariffs.

Progress toward this pan-European approach took a step forward in mid-May when the EU announced it will not impose a planned doubling of retaliatory tariffs on U.S. goods in light of news discussions with the U.S. on global steel capacity. In a joint statement, the U.S. and EU said they “can partner to promote high standards, address shared concerns, and hold countries like China that support trade-distorting policies to account.”

This need for leverage also applies to the Section 301 tariffs on imports from China. “If the administration can resolve disputes with Europe and announce some sort of joint effort to maximize leverage on China then they can strengthen relationships with traditional allies and apply pressure on China,” said Zive. “Until that happens, we should expect tariffs for the foreseeable future.”