The week started off with President Trump threatening to put tariffs on Colombian goods entering into the United States. The tariffs were used as leverage against the Colombian government who initially refused to allow U.S. military planes carrying individuals deported from the United States to land in Colombia. Eventually, the United States and Colombia came to an agreement on how deported individuals would be transported to Colombia and no tariffs were imposed. While President Trump did not follow through on his threats to impose tariffs on Colombian goods, he maintained his stance on imposing tariffs on imports from Mexico, Canada, and China to take effect as early as February 1st and announced at a press conference on January 30th that the announcement was imminent and would be made over the weekend. Husch Blackwell’s International Trade and Supply Chain Team is monitoring this situation closely, however, there are not specific orders or proclamations confirming that this is more than a threat at the time of the posting of this trade update.
In a Press Briefing on January 28th, Press Secretary Leavitt also confirmed that President Trump is considering sectoral tariffs on certain sectors like pharmaceuticals, semiconductor chips, steel, aluminum, and copper. However, President Trump has not yet taken action to implement any of these tariffs.
Based on the first two weeks, it appears President Trump will use tariffs as a tool to pursue his foreign policy agenda and tariffs may replace sanctions to a certain extent.
Anti-Dumping and Countervailing Duty Changes
The antidumping and countervailing duty provisions in the America First memorandum were heavily debated this week. Of particular interest was the provision regarding “transnational subsidies, cost adjustments, affiliations, and ‘zeroing.’” Zeroing is a concept where antidumping margins are calculated by disregarding those sales where there is no margin and only accounting for sales where margins are positive. Zeroing was considered a violation of the WTO almost 20 years ago and the Department of Commerce which conducts these trade remedy investigations has utilized alternative margin analyses to calculate dumping margins since the mid-2000s. If the concept of zeroing is reinstated it may result in higher antidumping duty rates for exporters of goods to the United States because the margin calculation only relies on positive margins and does not provide the margin reducing benefit of factoring zero or negative margin transactions which bring the average antidumping duty margin down. These proposals are still in discussions as many of these concepts would require revisions to the existing regulations governing the conduct of these proceedings.
Congressional Trade Actions
Over the last two weeks, Congress has also been focused on trade issues including reintroducing the de minimis bill for Section 301 goods and the Reciprocal Trade Act. The de minimis bill, reintroduced by Representative Murphy from North Carolina would prohibit the use of de minimis entry for imports that include products subject to Section 301 tariffs.
The Reciprocal Trade Act, introduced by Representative Moore, would authorize the president to negotiate with other countries on issues like tariffs. The bill would also allow the president to impose tariffs on foreign countries equal to any tariffs on U.S. goods imposed by those countries.
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