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Trump’s Conflicting Trade Policies Confusing U.S. Importers

Posted September 18, 2018

Following nearly a decade of legislative delay and political wrangling to obtain duty relief for thousands of products not available from domestic production, the hard-fought victory recently achieved by U.S. manufacturers working to revive the Miscellaneous Tariff Bill (MTB) has largely been squashed by the Trump administration’s heavy-handed move this week to impose additional punitive tariffs on Chinese imports.

Business groups have been urging Congress to renew the MTB legislation since the last measure expired at the end of 2012. Broadly supported by lawmakers of both parties, the MTB temporarily reduces or suspends tariffs on various imported raw materials and intermediate goods that are not produced in the United States for a period of three years.

In accordance with newly implemented appropriations rules, petitions for tariff relief must now be submitted to the International Trade Commission, which then objectively analyzes their merits and issues public reports to Congress along with recommendations. The new earmark-free MTB process is a departure from the prior arrangement whereby individual members of Congress sought tariff relief on behalf of companies; a practice which many fiscal conservatives and public watchdog groups decried as being prone to abuse.

A significant amount of the duty suspensions relate to chemicals or other inputs used by U.S. manufacturers, “who assert that the tariff relief provided by the MTB helps reduce their manufacturing costs, thus making their products more competitive,” according to a Republican Party summary of the bill.

The American Chemistry Council said Trump signing MTB into law showed support for U.S. chemical manufacturers that rely on foreign inputs to retain their production cost advantage over other regions, and hoped that it would help the president “see that a zero-tariff policy that helps create new markets for producers and brings innovative products of chemistry to new regions is the best course for U.S. trade policy.”

No such luck, but the MTB has rolled back tariffs on roughly 1,700 products in the U.S. tariff schedule. Unfortunately, however, the MTB does nothing to mitigate the punitive Section 301 duties the Trump administration has applied to an increasing amount of Chnese imports.

If you are experiencing a little cognitive dissonance at this point from things not quite adding up, rest assured that you’re not alone. As Democratic congressman Bill Pascrell stated on his blog the other week: “What is confusing right now is the fact that, while the Administration continues to move forward with tariffs that will cover nearly half of all imported products from China, the MTB will reduce or remove tariffs on many of the same products.”

Indeed, Pascrell argues that the administration’s “chaotic approach to trade” is clearly demonstrated by the fact that once the additional Section 301 tariffs on Chinese imports announced this week come into effect, the overlap between goods being provided with duty relief to help boost the competitiveness of U.S. manufacturers and those being simultaneously hit with hugely counterproductive surtaxes will grow to more than 1,000 products.

Meanwhile, hopes for a more coherent trade policy were cast into serious doubt by Trump’s remarks at a White House event yesterday when he incorrectly boasted that “China is now paying us billions of dollars in tariffs” and celebrated the Treasury Department raking in “tremendous amounts of money, which is great for our country.”