Trade News Updates
By Margaret Lange
The first month of 2020 has been extremely busy with USTR decisions, Presidential Orders, and signed trade deals and agreements. These have significant current and future impact to sourcing and sales decisions for U.S. Importers and Exporters.
U.S.-Japan Trade Agreement – Effective January 1, 2020
The Trade Agreement signed on October 7, 2019, by Robert Lighthizer and the Ambassador of Japan, Shinsuke J. Sugiyama, took effect in Wednesday, January 1, 2020. The trade deal Fact Sheet describes the agreed cuts to tariffs on certain U.S. agricultural products and U.S. reduction or elimination of tariffs on certain agricultural and industrial goods from Japan. There is currently no indication as to when the two sides will meet to start the next round of talks that will further broaden the agreement.
Signing of the U.S.-China Phase 1 Deal
On January 15, 2020, President Trump and the Chinese Vice Premier Liu He, signed the “Phase One” U.S.-China trade deal. The agreement includes Intellectual Property, Technology Transfer, Agriculture, Financial Services, Currency, Expanding Trace and a Dispute Resolution arrangement. As part of the deal, President Trump agreed to reduce the List 4A tariffs from 15% to 7.5% with an effective date of February 14, 2020. The modification was posted in the January 22, 2020 Federal Register notice. The Signed Agreement and a Fact Sheet can be found on the USTR website.
Senate Passed the USMCA
On January 16, 2020, the Senate voted in favor of modernization of the NAFTA to the United States-Mexico-Canada Agreement (USMCA). The measure was sent to President Trump who is signed the agreement on Wednesday, January 29, 2020 in a ceremony at the White House. A fact sheet on the USMCA agreement can be found on the USTR website.
Presidential Executive Order Imposing Sanctions with Respect to Iran
On January 10, 2020, President Trump signed an Executive Order imposing sanctions on Iran. The sanctions are intended to deny Iran all paths to nuclear weapons and missiles, to counter the totality of Iran’s malign influence in the region, and to deny the Iranian government revenues that may be used to fund and support its nuclear program, missile development, terrorism and terrorist proxy networks, and malign regional influence. Full details of the sanctions are described in the Executive Order.
Trump Expands 232 Tariffs on Steel and Aluminum Imports
In a Presidential Proclamation on Friday, January 17, 2020, President Trump announced the expansion of the 232 tariffs on imports of “derivative” aluminum and steel articles. The increase is the result of an assessment by the Commerce Secretary, Wilbur Ross, where foreign producers have increased shipments of the stated articles to “circumvent” the duties on aluminum and steel articles.
An article is determined to be a “derivative” of an aluminum or steel article if all of the following conditions are present:
- The aluminum or steel article represents, on average, two-thirds or more of the total cost of materials of the derivative article;
- Import volumes of such derivative article increased year-to-year since June 1, 2018, following the imposition of the tariffs in Proclamation 9704 and Proclamation 9705; and
- Import volumes of such derivative article following the imposition of the tariffs exceeded the 4% average increase in the total volume of goods imported into the United States during the same period since June 1, 2018.
Duties to be effective on entries on or after February 8, 2020. Chapter 99, Subchapter III of the HTS is modified as provided in Annex 1 and Annex 11 of the proclamation.
- 25% on some Steel articles
- Applies to all countries except for Argentina, Australia, Brazil, Canada, Mexico, and South Korea
- Products include nails, tacks, drawing pins, corrugated nails, staples, and bumper and body stampings for motor vehicles and tractors.
- 10% on some Aluminum articles
- Applies to all countries except Argentina, Australia, Canada and Mexico.
- Products include stranded wire, cables, plaited bands, and bumper and body stampings for motor vehicles and tractors.
The U.S. and France Agree to a Truce on Digital Services Tax (DST)
The U.S. initiated a Section 301 investigation after the government of France announced a proposal for a 3% tax on company revenues generated from providing certain digital services, that the U.S. believes largely impact U.S. Companies. During a meeting at the World Economic Forum in Davos on January 23, 2020, between the USTR, Steven Mnuchin and the French Finance Minister, Bruno Le Maire, the U.S. agreed to suspend the proposed $2.4 billion in tariffs on French goods including wine and cheese. France agreed to stop the collection of the DST; however, Mr. Le Maire stated that there is no suspension of French taxation.