Lawmakers Step Up Tariff-Exclusion Talk

Date: Monday, January 24, 2022
Source: Sourcing Journal

A bipartisan group of House lawmakers urged U.S. Trade Representative (USTR) Katherine Tai to expand and expedite a tariff exclusion process for goods produced in China. On Thursday, Reps. Ron Kind (D-Wisc.), Darin LaHood (R-Ill.), Suzan DelBene (D-Wash.), and Jackie Walorski (R-Ind.), along with 137 of their colleagues, asked the USTR’s office to establish a “comprehensive and fair” process to exempt products from Section 301 tariffs.

Reinstating and broadening the exclusion process would help American producers compete on the global stage, providing “critical support to American workers, businesses, and our economic recovery,” they wrote in a letter to Tai.

While members underscored the importance of holding China accountable for its “state-centered and nonmarket trade policies,” along with unfulfilled commitments to the U.S. government, American producers are bearing the financial burden for goods and components critical to their business operations, they wrote. The previous exclusion process for China-made goods lapsed in December 2020, further straining a U.S. business community already coping with Covid-19.

The USTR said in October that it would review expired exclusions case by case and possibly reinstate up to 549. The decision represented “an important first step to help workers in industries that have limited, if any, alternative sourcing options,” lawmakers wrote—but the “too narrow” process opens up just 1 percent of original exclusion applications for review.

The group wants to extend exclusion potential to “all products covered under Section 301 tariffs” to relieve financial pressures on U.S. businesses battling inflated goods and logistics costs over the past year. It also asked for “meaningful retroactivity” on duties American companies already paid.

American companies have had a difficult time diversifying their supply chains in the “continued absence” of critical exclusions, the letter said. “Addressing China’s unfair trade practices and holding them accountable, while encouraging businesses to manufacture and operate in the United States, is critical to our long-term economic competitiveness,” Rep. LaHood said Thursday. A new Section 301 exemption process would “help safeguard American-made products while eliminating supply chain bottlenecks,” he added.

House Ways and Means Committee member Rep. Kind said Section 301 duties have harmed small and medium size businesses in his home state and stressed “families by driving up the price of many products.”

The U.S. government must safeguard the livelihoods of “American workers, manufacturers, farmers, and consumers” against economic harm even as it works to counter China’s unfair trade practices, Rep. Walorski said. A “robust and transparent” tariff exclusion process offers “vital relief” for these groups, she added, noting that she would “continue to push for policies that level the playing field and equip Americans to compete in the global market.”

“Our economic recovery must include a pro-growth trade policy that will uplift American workers and support our global competitiveness,” Rep. DelBene said. To “help tackle supply chain issues impacting American businesses and workers,” the government must “give U.S. companies of all shapes and sizes a fair shot at meaningful tariff relief,” she added.

Industry demands government intervention

Industry players also lobbied the federal government for economic relief amid supply chain turmoil and coronavirus impacts. The Travel Goods Association (TGA) urged President Joe Biden’s administration for critical support.

Citing waning demand for travel goods since the pandemic began in 2020, TGA president Michele Marini Pittenger said that “no one was traveling, or going to work, or going to school, so no one was buying a suitcase, or a tote, or a laptop bag, or a backpack.”

The travel goods sector has battled economic pressure amid skyrocketing supply chain costs and shipping delays over the past two years. Section 301 tariffs compounded the financial burden, and the Generalized System Preferences’ (GSP) expiration one year ago added “insult to injury” as many brands “spent years shifting sourcing to countries that received duty-free access” as part of program, Marini Pittenger said.

The lapse added new tariffs of up to 20 percent “overnight” and exacerbated the pandemic’s impact, she said. Many American brands including “small, family-owned companies” pay 40 percent average duties on China-made products. The TGA implored the Biden administration to remove the Section 301 punitive tariffs and quickly renew the GSP program.

Marini Pittenger also addressed the supply chain disruption’s toll on travel goods brands facing product delays and carrier price gouging. Shipping rates are rising again after a brief decline, and carriers now charge detention fees on containers that importers can’t access, empty and return to the docks.

“We need aggressive enforcement, continued leadership to bring the full gamut of stakeholders to the table and just as critical, immediate relief to businesses that are still struggling under epic freight costs and punitive fees, both of which are fueling inflationary pressures,” she said.

These actions are harming brands despite their good intentions. “New actions must include all stakeholders, not only ports and carriers, but also terminal operators, truckers, port workers, chassis providers, and, of course, us, the shippers,” Marini Pittenger said. “We must recognize that we can’t fee our way out of the crisis. All parties must work together to develop multiple, connected, real, and practicable solutions that can be implemented today.”

 

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